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You clearly don't... 31/01/2017, 22236164

  1. Occam Logic

    1,008 Posts.
    You clearly don't understand how managed funds and ASX listed companies are regulated. When applying to launch a fund or list a company, ASIC really only cares about ensuring adequate disclosures are in place. They do not check or otherwise audit funds or companies. They have in recent years tightened up on ASX listings that are too speculative and far away from meaningful revenue (e.g. Guvera), but this is rare as the number of speculative stocks debated endlessly on HC show. If you are blindly putting your faith in regulators, you are naive. They are understaffed, for the main part poorly paid and as a result have a hard time attracting talented people compared to private enterprise.

    Yes, accountants will have to do annual reports etc. But they are not infallible either. Just look at the dozens, if not hundreds of product failures, both listed and unlisted over the years. Accountants may detect fraud (sometimes) but they generally not there to look at the bigger issues.

    Yes I am highly aware of managed futures because we conduct our own in depth due diligence on them and use them for our clients. Their ability to demonstrate large returns in short order is not in question. But any investment whose targets and generated returns as so far outside their peers deserves a healthy level of skepticism until you can determine a) their risk limits and controls and b) their actual portfolio trades over time to prove that their strategy is viable over the long term.  

    Looking at HML vs the other managed futures directly available to retail investors in Australia, it is apparent that HML are a long way outside the typical band of returns. I have included aimone's favourite, the Tulip Fund as an additional comparison given it's high historical returns for a strategy of this type.

    And using monthly returns
    I believe that in order to generate the sort of returns HML are targeting and producing, extraordinarily large risks taken on concentrated bets is about the only way to produce these sorts of outcomes. HML obviously has a level of skill to get this far, I'm not denying that. All I am trying to make clear to people is the level of risk embedded here. Blind parroting of the past returns as a measure of quality is not only pointless, it's ignorant and dangerous.

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