Frequently Asked Questions
Q. What is the Alpha Hedged Strategies Fund trying to achieve from an investment prospective?
A. The Fund is designed to provide risk-adjusted absolute returns, vs. the more traditional approach of seeking relative returns to some market index. The Fund looks to deliver more consistent returns with a low correlation to financial indices, while providing access to a broad range of hedge fund managers. The Fund employs a variety of hedged investment strategies, but with a liquid portfolio of its own securities, using the limited amounts of leverage and short-selling permitted in open-end mutual funds.
Q. What makes AIP Funds different from other hedge-fund-of-funds?
A. The Funds are more a fund-of-hedge-fund-managers, than a fund-of-hedge-funds. The Funds do not invest directly in hedge funds, but rather hire sub-advisors to manage a hedged portfolio in a separate account for one of the Underlying Funds. There are also feature differences, as the Funds are structured as an open-end mutual funds. AIP enjoys 100% transparency to the underlying securities that comprise each Underlying Fund. All Fund assets are held by an independent custodian bank, and subject to the governance of an independent board of trustees. We are also subject to all of the compliance and regulatory guidelines that govern the mutual fund industry.
Q. How many different managers do you have, and how do you determine how much each strategy is allocated?
A. We currently have 19 active managers, with 14 different strategies, to help us create a non-correlative portfolio structure and to dampen overall volatility and risk. The allocation process is dynamic in that we are constantly allocating and rebalancing our strategies based on the best-perceived future opportunities.
Q. How can I learn more about the strategies and the Sub-Advisors?
A. Click here to view information about our sub-advisors and their strategies.
Q. What can investors expect in terms of target return?
A. What we try to do is provide superior risk-adjusted returns, by optimizing not only our target range of return, but of the Funds’ standard deviation, and beta as well. Our objective is a high single-digit to low double-digit return with minimal beta, and volatility about one third to one fifth that of the general equity market.
Q. Are there limitations on buying or selling the Funds?
A. The Funds offer investors daily subscription and redemption capabilities, like a traditional open-end mutual fund, and are available through most major mutual fund supermarkets, with no transaction fee. In fact, they avoid almost all of the barriers that going directly to a hedge fund can present, such as; illiquidity, high initial investment minimums, lack of access to non-accredited investors and a lack of portfolio transparency. AIP Funds' shareholders enjoy all of the features commonly associated with mutual funds, such as: daily NAV, no lock-up periods, no performance fees and portfolio transparency (via the annual and semi-annual reports to shareholders). It is also available to non-accredited investors.
Q. Do the Funds impose any trading fees or restrictions for short-term trading into and out of the Funds?
A. The Funds do not impose a redemption fee. If you trade through any of the brokers the Funds are available through, they may impose additional trading fees and restrictions for short-term trading.
Q. How does the expense structure differ in a hedged mutual fund vs. a long only fund?
A. Because we are delivering a portfolio similar to a hedge fund of funds in an open-end mutual fund, the Funds have many of the same costs associated with hedge fund portfolio techniques. The Funds have to pay a higher fee to our hedge fund sub-advisors, than would be typical in the open-end mutual fund because of the complexity of the portfolio strategies these sub-advisors use. In essence the Funds' sub-advisors are typically managing a double portfolio with both long and short components. (Click here to read “Understanding Operating Expenses”) for a more detailed description of the Funds’ fee structure.
Beta measures the correlation and magnitude with which a fund moves in relation to a general market benchmark, the S&P 500 Standard Deviation measures the historical volatility of a fund or benchmark, utilizing daily returns since the inception of the Funds.
While the Funds are no-load, management fees and other expenses still apply. Mutual fund investing involves risk; loss of principal is possible. Please consult an investment professional for advice regarding your particular circumstances.