IQHIX - IQ Alpha Hedge Strategy Inst

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IQ Alpha Hedge Strategy Inst (IQHIX)
Expense Ratio: 1.58%
Expected Lifetime Fees: $44,316.40

The IQ Alpha Hedge Strategy Inst fund (IQHIX) is a Multialternative fund started on 6/30/2008 and has $262.70 million in assets under management. The current manager has been running IQ Alpha Hedge Strategy Inst since 3/5/2011. The fund is rated by Morningstar. This fund does not charge 12b-1 fees.

MarketRiders Prefers The Following ETF

ProShares Credit Suisse 130/30 (CSM)
Expense Ratio: 0.95%
Expected Lifetime Fees: $28,436.39

The ProShares Credit Suisse 130/30 (CSM) is an Exchange Traded Fund. It is a "basket" of securities that index the Multialternative investment strategy and is an alternative to a Multialternative mutual fund. Fees are very low compared to a comparable mutual fund like IQ Alpha Hedge Strategy Inst because computers automatically manage the stocks.

The Following Multialternative Funds Have Lower Fees Than IQ Alpha Hedge Strategy Inst (IQHIX). Why are these metrics important?
Mutual Fund Name Ticker Symbol Turnover Assets (M) Annual Fees
Columbia Absolute Return Enhanced Multi Strategy Fund Class A CEMAX 11.0% 102 1.48%
Columbia Absolute Return Enhanced Multi Strategy Fund Class Z CEMZX 11.0% 102 1.23%
Columbia Absolute Return Multi Strategy Fund Class A CMSAX 16.0% 180 1.38%
Columbia Absolute Return Multi Strategy Fund Class Z CARZX 16.0% 180 1.13%
DWS Alternative Asset Allocation Instl AAAZX 32.0% 679 1.55%
DWS Alternative Asset Allocation S AAASX 32.0% 679 1.55%
DWS Select Alternative Allocation Instl SELIX 15.0% 477 1.39%
DWS Select Alternative Allocation S SELSX 15.0% 477 1.54%
Goldman Sachs Absolute Return Tracker I GJRTX 105.0% 1,700 1.18%
Goldman Sachs Absolute Return Tracker IR GSRTX 105.0% 1,700 1.33%
Guggenheim Multi-Hedge Strategies H RYMSX 433.0% 130 1.57%
Guggenheim Multi-Hedge Strategies I RYIMX 433.0% 130 1.32%
John Hancock II Alternative Asset Allocation Fund Class I JAAIX 90.0% 123 1.34%
Nuveen Tactical Market Opportunities A NTMAX 177.0% 205 1.42%
Nuveen Tactical Market Opportunities I FGTYX 177.0% 205 1.17%
SunAmerica Alternative Strategies W SUNWX 129.0% 371 1.53%
UBS Dynamic Alpha Y BNAYX 65.0% 260 1.54%

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Why Are These Metrics Important?

Turnover represents how much of a mutual fund's holdings are changed over the course of a year through buying and selling. Active mutual funds have an average turnover rate of about 85%, meaning that funds are turning over nearly all of their holdings every year. A high turnover means you could make lower returns because: 1) buying and selling stocks costs money through commissions and spreads and 2) the fund will distribute yearly capital gains which increases your taxes. Look for funds with turnover rates below 50%. For comparison, ETF turnover rates average around 10% or lower.

Generally, smaller funds do better than larger ones. The more assets in a mutual fund, the lower the chance that it will beat its index. Managers outperform an index by choosing stocks that are undervalued. In order to find these undervalued stocks, the manager has to know more than his competitors to develop an "edge." There are only a finite number of stocks a mutual fund manager can reasonably analyze and actively track to gain such a competitive edge. When the fund has more assets, the manager must analyze large companies because he needs to take larger positions. Large companies are more efficiently priced in the market and it becomes increasingly difficult to get an edge.