New Global X ETF Follows Hedge Fund Picks
June 5, 2012
Global X Funds, a New York, NY-based ETF manager, unveiled the Global X Top Guru Holdings Index ETF (NYSEArca: GURU).
GURU attempts to mimic the holdings of hedge funds with the “highest conviction ideas.”
The fund follows a proprietary index called the “Top Guru Holdings Index,” which combs through investment holdings from a select pool of hedge funds where the 13F information is most valuable. Hedge funds with high turnover and non-concentrated positions are eliminated from the pool.
Currently, the new fund holds 51 stocks.
The largest industry sectors represented inside GURU are technology (21.57%), financials (17.05%), and industrials (15.09%). GURU charges annual expenses of 0.75% and rebalances its holdings quarterly.
In other new ETF launches, the AlphaClone Alternative Alpha ETF (NYSEArca: ALFA) began trading last week.
ALFA is linked to the AlphaClone Hedge Fund Long/Short Index, which tracks the performance of US-traded equity securities to which hedge funds and institutional investors have disclosed significant exposure.
Among the fund’s goal is to capture alpha from these managers' long positions while protecting against protracted market downturns through a dynamic hedge mechanism.
The indexing methodology developed by AlphaClone ranks hedge funds and institutional investors based on the efficacy of replicating their publicity disclosed positions. Equities are selected from those managers with the highest ranking, or "Clone Score". The index also incorporates a rules-based hedging strategy that adjusts holdings between being long only and market hedged based on certain technical price targets for a broad index of US equities.
ALFA’s underlying index is reconstituted quarterly and can vary between being long only and market neutral (up to
50% short exposure using inverse unleveraged exchange-traded funds), also known as “market hedged,” based on market volatility targets defined by the methodology.
Exchange Traded Concepts serves as investment adviser to ALFA, with Index Management Solutions serving as sub-adviser.
ALFA’s annual expense ratio is 0.95% and it has quarterly distributions.