The best way to not have any sub advisory risk is to invest via separately managed accounts. qplum has put in a lot of work to make it efficient for all our clients to invest via separately managed accounts.
We need to absolutely reject investments with lockup. qplum invests in liquid instruments and has built an HFT-aware execution algorithm that allows you to withdraw your money within a few days.
As a principal at Cliffwater recently remarked, anything above a hundred basis points inclusive of everything just does not make any sense. Fees have caught up with people big time. And it should. In a low return environment, it's very important to have low fees. Our fees is just fifty basis points of AUM per annum, and there are no performance fees.
According to industry surveys, monitoring and reporting are a major overhead. For most investment management firms, it takes up more resources than even the portfolio management function.
It is important for the real investor to be in control all the time. qplum's beautiful smartphone and web apps help the client to know real-time what is happening to their money.
"I am a real money manager. I feel the pinch of a million dollar loss equal to or more than the gain of a million dollars. I know that we are at the tail end of such a strong eight-year bull run that 99% of market simulations in 2009 would have underperformed what the market actually did. 99%! If there was ever a time where past performance is not indicative of future, this certainly is one. I feel no matter what I invest in, I can lose money."
"I feel like I am sticking my neck out if I decide to invest in hedge funds. Let me clarify. I think hedge fund strategies like momentum and risk parity are great. But a lot needs to change with hedge funds. Hedge funds used to sell themselves on performance. They have massively Underperformed. They were then marketed for crisis risk mitigation and in the last few years there have been a lot of macro events, all of which should have been good for hedge funds but miraculously ended up being bad. Their correlation to the stock market is as high as 82%."