But as mentioned above, the data are compelling. AlphaClone reports an average annualized return of 17% for its strategy when backtested from Jan. 1, 2000 through year-end 2011. That compared to slightly better than break-even for the S&P 500 (that comparison does include S&P 500 dividends).
AlphaClone believes that an important contributing factor to the published results is that the cloning strategy does not have to overcome the typical 2-and-20 pay structure (2% of assets and 20% of profits) that so many hedge funds impose.
To buy this fund would require a belief that the past results can be repeated under the hood of a new ETF, but one thing is clear: This is not the gimmick that it appears to be at first blush.
At the time of publication, Nusbaum had no positions in securities mentioned.This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV