Vanguard's year-old hedge fund 'a home run'
Alternative Strategies up nearly 10% in first year
It's still early days, but so far Vanguard Group, the $3.6 trillion, Malvern-based investment company best known for its popular, low-fee index stock and bond funds, "has hit a home run" with Vanguard Alternative Strategies Fund (f/k/a Vanguard Trustees' Equity), the company's year-old hedge fund, which advertises a "murky" mix of long/short, merger-arbitrage, fixed-income relative value, currency and equity strategies, writes Jeff DeMaso in Daniel P. Wiener's Brooklyn-based Independent Adviser for Vanguard Investors newsletter.
"Since its August 11, 2015 launch, Alternative Strategies' 9.5% return is ahead of (Vanguard) Total Stock Market's 5.6% gain, Total Bond Market's 5.5% advance and Prime Money Market's meager 0.3% return," added DeMaso. Assets totalled around $200 million. (Corrected)
The fund has moved independently of the stock market and with only a modest correlation to the broad bond market, as hedge funds are supposed to do (and too often don't), DeMaso added. The fund is limited to institutional investors. Managers are Michael Roach, Anatoly Shtekhman and Binbin Guo.