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Kinnel: Be Skeptical of Alts' 'Free Lunch' Promises

Russ Kinnel shares his Morningstar Investment Conference take-aways including not losing sight of quality when bargain-hunting, being skeptical of hot stocks, and finding value in TIPS.

Russ Kinnel: Hi I'm Russ Kinnel, director of manager research at Morningstar. Our conference is just about wrapped up, I thought I'd share a few take-aways. 

We just heard from Bill McNabb, CEO of Vanguard. And he took the industry to task on a couple of things. One, he said some of the ETFs that we've seen launched are not really even investments. They're just so niche and really not serving investors well, he worried about that. He also pointed out that Vanguard's been reluctant to go into the alt space, they do have a little bit, but he took the industry to task for often kind of promising a free lunch, and I agree heartily with that. We often hear from long-short or market-neutral funds which sort of imply that you get all the market's upside and much less downside, and of course it never really works that way. So bring a lot of skepticism to any alts fund, especially one without much of a track record.