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I read about (mostly the risks of) ETFs that try to replicate hedge funds, such as http://www.etf.com/etf-education-center/21043-article-46-alternatives-etfs-can-an-etf-replicate-a-hedge-fund.html and
http://online.barrons.com/articles/hedge-fund-etfs-outperform-hedge-funds-1420259717,
but these hedge funds fail to outperform consistently even standard stock market indices.

Then I wondered: are there any ETFs that parallel or track successful investment companies with proven successful consistency, such as Dimensional Fund Advisors or Renaissance Technologies? I couldn't find any; the paragons to be copied doN'T have to be hedge funds.

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What you may be looking for are multi-manager ETFs; these invest in a basket of diversified funds to get the best out of all of the funds. The problem with multi-manager funds is, of course, that you pay fees twice; once to the fund itself and once to each of the funds in the fund. The low fees on ETFs mean that it is not very profitable to actively maintain one so there are not many around (Googling returns very few). Noting that historic success doesn't guarantee future success and that fees are being applied to fees these funds only really benefit from diversification of manager performance risk.

partial source of information and an example of a (non-outperforming) Multi-manager ETF: http://www.etfstrategy.co.uk/advisorshares-sets-date-for-multi-manager-etf-with-charitable-twist-give-53126/

  • The article you linked to shows "The fund has a net expense ratio of 1.70%" and from its inception, it's up 28% vs the S&P 57%. How is this an example of a fund outperforming...? – JoeTaxpayer Mar 17 '15 at 12:25
  • sorry, communication issue; I meant it as an example of a MM ETF not necessarily an outperforming one. I'll edit – MD-Tech Mar 17 '15 at 12:32

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