Explanation:
Hedge fund returns can indeed be replicated without having direct exposure. This is made possible through products offered by large investment management firms that mimic the hedge fund index.
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Q.2589 An investor wants to replicate the hedge fund return without taking direct exposure to hedge funds. A fund manager informs the investor that various investment management firms now offer products which mimic the hedge fund index. The fund manager further asserts that these products typically have more liquidity and lower fees. Which of the following options is most accurate?
A
Hedge fund returns cannot be replicated without having direct exposure.
B
Hedge fund returns can be replicated without having direct exposure.
C
Such products have low liquidity.
D
Such products have higher fees as compared to hedge funds.