Liquidity adds to institutional zest for hedge fund clones

Demand is high for alternative ETFs, despite underwhelming performance

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Lower costs and greater liquidity are boosting interest in hedge fund trackers

Funds that track hedge fund strategies have been criticised for high volatility, low returns and for investing in overcrowded equities – sometimes with such a lag the underlying hedge funds have dumped the stocks in question months before.

Yet judging by recent product launches, hedge fund simulators are still in demand among institutional investors who see their liquidity as a key benefit.

Costs and liquidity pressures are the two main reasons for institutional investors' demand for hedge fund