Hi PF,
I have a 401(k) with a former employer with about $34k in it. The plan has a very limited set of investment choices, but one of them is very interesting. It's called a "Special Situations" portfolio, and the description states:
The Special Situations Portfolio is intended to offer participants access to investments that they could not easily acquire elsewhere.
___ combines a portfolio of relative value or “alpha” investments (investments not influenced by general market swings) with a mix of generic asset classes or “betas” such as equities, deflation-sensitive or inflation-sensitive assets. ___ does this by deploying a wide range of investment strategies including using third-party hedge fund managers as well as trades directed by ___. The Special Situations Portfolio combines all of these investment approaches into a single portfolio.
The Trustees think the mix of asset class exposures and relative value investments embedded within Special Situations provides a well-diversified portfolio of asset exposures. However, participants should be aware that the Special Situations Portfolio gives participants relatively modest exposure to equity markets, and its performance is intended to have a low correlation to equity market performance.
From what I can tell, the fund invests in hedge funds and other alternative investments, which I certainly wouldn't otherwise have access to. The big issue is that the fees are insane: 6.84% annually, compared to 0.05% for the "Passive US Equities" option.
However, the past performance is extremely admirable - link to performance chart here. As you can see, the returns (which are computed after fees) smash the benchmark, and on an annualized basis are comparable to the Passive US Equities option, with much lower volatility, and thus a much higher Sharpe ratio.
The question is: do you guys see any problems with this? I can't change my investment allocations until the end of the year, but I'm thinking of switching to 100% of this fund (note that this 401k is only about 20% of my total retirement savings).
Submitted March 07, 2017 at 10:18PM by pfthrowaway12g http://ift.tt/2lW6tuR
