PDPCX - Virtus Alternatives Diversifier C

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Virtus Alternatives Diversifier C (PDPCX)
Expense Ratio: 2.96%
Expected Lifetime Fees: $72,207.37

The Virtus Alternatives Diversifier C fund (PDPCX) is a Multialternative fund started on 11/30/2005 and has $159.90 million in assets under management. The current manager has been running Virtus Alternatives Diversifier C since 7/18/2008. The fund is rated by Morningstar. In addition to trading fees and broker commissions, this fund has 12b-1 fees of 1.00%

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 Virtus Alternatives Diversifier C because computers automatically manage the stocks.

The Following Multialternative Funds Have Lower Fees Than Virtus Alternatives Diversifier C (PDPCX). Why are these metrics important?
Mutual Fund Name Ticker Symbol Turnover Assets (M) Annual Fees
Absolute Strategies I ASFIX 112.0% 4,100 1.75%
Absolute Strategies R ASFAX 112.0% 4,100 2.13%
ASTON/Lake Partners LASSO Alternatives I ALSOX 79.8% 257 2.74%
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%
Compass EMP Alternative Strategies A CAIAX 278.5% 237 1.76%
Dunham Monthly Distribution Fund Class A DAMDX 277.0% 135 2.52%
DWS Alternative Asset Allocation A AAAAX 32.0% 679 1.80%
DWS Alternative Asset Allocation C AAAPX 32.0% 679 2.55%
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 A SELAX 15.0% 477 1.71%
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 A GARTX 105.0% 1,700 1.58%
Goldman Sachs Absolute Return Tracker C GCRTX 105.0% 1,700 2.33%
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%
Goldman Sachs Absolute Return Tracker R GRRTX 105.0% 1,700 1.83%
Guggenheim Multi-Hedge Strategies C RYMRX 433.0% 130 2.31%
Guggenheim Multi-Hedge Strategies H RYMSX 433.0% 130 1.57%
Guggenheim Multi-Hedge Strategies I RYIMX 433.0% 130 1.32%
IQ Alpha Hedge Strategy Inst IQHIX 195.0% 263 1.58%
IQ Alpha Hedge Strategy Inv IQHOX 195.0% 263 2.18%
JHancock2 Alternative Asset Allc A JAAAX 90.0% 123 1.65%
John Hancock II Alternative Asset Allocation Fund Class I JAAIX 90.0% 123 1.34%
New Century Alternative Strategies NCHPX 31.0% 114 2.28%
Nuveen Tactical Market Opportunities A NTMAX 177.0% 205 1.42%
Nuveen Tactical Market Opportunities I FGTYX 177.0% 205 1.17%
PACE Alternative Strategies Y PASYX 295.0% 493 1.70%
Ramius Dynamic Replication Fund Class A RDRAX 374.0% 103 1.93%
Ramius Dynamic Replication Fund Class I RDRIX 374.0% 103 1.68%
SunAmerica Alternative Strategies A SUNAX 129.0% 371 1.72%
SunAmerica Alternative Strategies W SUNWX 129.0% 371 1.53%
Transamerica Multi-Manager Alt Strat A IMUAX 31.0% 452 2.07%
Transamerica Multi-Manager Alt Strat C IMUCX 31.0% 452 2.78%
Transamerica Multi-Manager Alt Strat I TASIX 31.0% 452 1.76%
UBS Dynamic Alpha A BNASZ 65.0% 260 1.81%
UBS Dynamic Alpha Y BNAYX 65.0% 260 1.54%
Virtus Alternatives Diversifier A PDPAX 18.0% 160 2.21%

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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.