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GRT Absolute Return - Cash position

edited September 2011 in Fund Discussions
GRT Absolute Return has done ok since I invested in it, and is (slightly) beating the S&P 500 for the year. However, Morningstar shows it having over 40% of assets in cash and by far its largest position is in a Fidelity Institutional Money Market fund: This is a fund with an expense ratio, after waivers, of 2.19%. How should I feel about this situation? Is this active management, or an expensive money market fund?


  • edited September 2011
    A few thoughts:

    I love alternative investments - absolute return, long/short, event-driven, managed futures, etc. However, there will be times when each of these strategies will underperform. Additionally, I think many of these investments are either gimmicky or not able to be nimble enough to really pull off the strategy to the fullest. Management is also an issue, as well. Overall, there are tons of alternative investments available to retail investors, but not that many great ones.

    I don't think holding cash is out of the ordinary when it comes to an absolute return strategy, and while the fund hasn't really done exceptionally well, it does have a highly regarded management team and an absolute return strategy is generally attempting "singles" in good or bad weather - home runs are not really to be expected. Shorting, derivatives and other added investments often lead to higher expenses in alternative funds. I wouldn't call it an expensive money market fund, but I wouldn't expect huge returns from it - I'd say expectations would be for consistent, conservative "all-weather" (and likely non-correlated to some degree) returns. I don't know if the fund spells out goals in the prospectus.
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