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Hedge funds managed $2.82 trillion as of the end of Q3 2014 but some investors are pulling back. due to high expenses and lower returns than the S&P 500 in recent years. Sliced Investing believes it can attract investors to its online platform with lower fees, more transparency and low minimum investments.
Here’s how Sliced works: Accredited investors get to pick from the company’s curated and thematic funds (equities, real estate, etc.) and invest as little as $20,000. Traditionally, these funds require much larger minimum investments, usually in the six figures, so Sliced is making them accessible to investors with smaller checkbooks. In fact, the company said back in August that about 80 percent of accredited investors can’t afford these hedge fund minimums. Once enough investors have chosen to put money into a fund, enough to meet a certain threshold, Sliced invests the pooled money into the fund. It’s a bit like what AngelList is doing with syndicates, but for hedge funds. Sliced makes its money by taking small cuts from the profits customers make from their Sliced investments.
