They’re claiming that picking a subset of 20 S&P stocks and charging a 1% fee is an expected win for their clients’ net returns, so if what they’re actually selling is an expected money-losing strategy compared to buying the whole index, that seems like a catch
Exactly! So I think that is exactly the catch—I think the clients are paying for them to manage the money and update holdings according to their somewhat public strategy (following 13f?g? disclosures of what whales are buying has its lag, but can work out if they’re not short trades but long positions.. with limits). So it’s not obviously money losing if they outperform, and we don’t know that they will underperform the index. What we do know is that if they’re charging a fee to buy a rarely changing openly available list of stocks… then clients would be a little silly.