Tag Archives: guru

hedge fund etf
ETF News, People Profiles

Hedge Fund ETF Pile On Leads To Crowd Control Issues

Leave a comment

A pile on approach is impacting hedge fund emulator ETF products (e.g. $GURU, $ALFA), and leading to crowd control issues, according to a recent Bloomberg article re-distributed via TradersMagazine story with title:

Hedge Fund-Replicating ETFs Hurt by Crowded Trade Selloff

MarketsMuse curators carry the story here..

(Bloomberg) — Exchange-traded funds designed to mimic the strategies of hedge funds are mimicking their way into some serious losses of late.

Since the start of August, the Global X Guru Index ETF,  (NYSE:GURU) which is tied to hedge funds’ top holdings using 13F filings, has slipped 10 percent, a casualty of popular trades that fell during this summer’s selloff and have so far failed to get back up. The Standard & Poor’s 500 Index has declined just 1.2 percent over the same period and recovered all of its 11 percent August correction.

“When something like this is opened up to retail investors, they tend to get the worst out of the deal,” said Bill Schultz, who oversees $1.2 billion as chief investment officer at McQueen, Ball & Associates Inc. in Bethlehem, Pennsylvania. “It’s not something that we find particularly attractive for our clients.”

The AlphaClone Alternative Alpha ETF, (NYSEarca:ALFA)which tracks the performance of U.S. equities to which hedge funds and institutional investors have disclosed “significant” exposure, has lost 19 percent since the start of August.

While lining up with the biggest speculators can make sense when markets rise, it has the potential to increase the pain on the way back down as everyone bails from losing bets at the same time. Trepidation has been in no short supply among money managers, with funds run by Stan Druckenmiller, Louis Bacon and David Tepper among those that disclosed declines in U.S.-listed equity holdings in the third quarter.

Quick selloffs are even more pronounced for stocks with “crowded” hedge fund positioning, according to Stan Altshuller, chief research officer at Novus Partners Inc. Novus measures crowdedness not only by the percentage ownership by hedge funds, but also by how many different firms are invested at the same time and how easy it would be for them to liquidate, he said.

Using this approach, a basket of the 20 most crowded stocks has trailed the S&P 500 by 21 percent from the start of June through Nov. 4, Novus data show. Companies such as Community Health Systems Inc., which decreased as much as 59 percent over the period, and Ally Financial Inc. are to blame for the underperformance.

“Nobody seems to grasp the severity of crowding as a risk,” Altshuller said by phone. “When the opportunity to exit is narrow, and there are a lot of funds in the stock, that creates the most dangerous type of situation. These stocks get absolutely crushed in times like these.”

Aligning one’s holdings with those of hedge funds hasn’t always been a losing proposition. A Goldman Sachs Group Inc. gauge that identifies the most popular bets across firms had annual returns exceeding the S&P 500 in each year from 2012 through 2014. That’s changed in 2015, with the Hedge Fund Very Important Positions Index trailing the benchmark index by 5 percentage points year-to-date, Goldman Sachs data show.

The full story from Bloomberg LP is here

ETF News

These ETFs Could Make You The Next Warren Buffett

Leave a comment

MarketsMuse blog update profiles the best ETFs to invest in according to Zacks Equity Research to become the next Warren Buffett. The ETFs range from technology, to financial, to consumer. This MarketsMuse update is courtesy of Zacks Equity Research article, “Follow Warren Buffett with These Stocks and ETFs“, with an excerpt below. 

Everybody dreams of becoming rich and famous like Warren Buffett, Carl Icahn, Daniel Loeb and David Tepper. After all, these Wall Street gurus have successfully put their money in the right place and continued to reap huge returns.

Buffett’s Berkshire Hathaway has enjoyed an average growth rate of about 20% annually. Furthermore, Berkshire Hathaway has added more than 104% over the last five years that is better than the gain of over 94% from the broader market ETF SPDR S&P 500 ETF (SPY) during the same timeframe.

Thanks to this achievement, following billionaires’ investment strategies is now a fad these days. While investing in Berkshire is always a good way of following Buffett, who is commonly known as The Oracle of Omaha, there are numerous other ways to reproduce this stock market veteran’s investment theme and jazz up one’s portfolio.

Normally, Buffett takes interest in companies trading below what he believes is their intrinsic value.He aims long-term outperformance and apparently ignores short-term downturns. We have analyzed a few stocks that remain Buffett’s favorites and highlight the related ETFs for investors who want to follow this investment veteran.

The ETFs that Zacks Equity Research recommend to invest in to follow in Warren Buffett’s footsteps are as follows:

  • iShares U.S. Financial Services ETF (IYG)
  • SPDR Consumer Staples Select Sector ETF(XLP)
  • Market Vectors Retail ETF(RTH)
  • Consumer Staples ETF (VDC)
  • NASDAQ Technology Dividend Index Fund (TDIV)
  • Direxion iBillionaire Index ETF (IBLN)
  • Validea Market Legends ETF (VALX)
  •  Global X Guru Holdings Index ETF (GURU)

To read more about why Zacks Equity Research named these ETFs the best to be like Warren Buffett, click here.

ETF News

iBillionaire Index To Track Big Buck Bets; ETF in the Works

Leave a comment

indexuniverseCourtesy of Hung Tran/IndexUniverse

MarketsMuse editor: In the category of “what will they think of next?”

A new index tracking the success of billionaire investors went live today, and a related “Billionaire ETF”—perhaps a bit like the Global X Guru ETF (GURU | C-48)—appears to be in the works as well.

iBillionaire Inc. today launched a new index designed for investors to track the investment portfolios of luminaries such as Warren Buffett, Carl Icahn and George Soros. The New York-based firm said in a press release it’s also designing an iBillionaire ETF to boost investors’ portfolios “like a billionaire,” according to the firm.

The iBillionaire Index, like Global X’s $251 million ETF ‘GURU,’  is devised from 13F filings and is composed of the top 30 large-cap equities listed on the S&P 500 in which the billionaire investors have made the most bets. The index will be calculated and distributed by the New York Stock Exchange.

For the full article, please visit IndexUniverse.com

ETF News

A Look At The New Hedge-Fund Guru ETF (GURU, ALFA, CPI)

Leave a comment

By Benzinga.com

For those that have always wanted to invest in a hedge fund, but can’t afford those pesky minimum investments (often well into six and seven figures) or for those that want to part with 2% or 3% in management fees on top of 20%-30% of the profits, the ETF industry is attempting to come to the rescue.

Hedge fund ETFs have been around for several years, but some new entrants to the hedge fund ETF game have popped up recently. The newest is the Global X Top Guru Holdings Index ETF GURU +0.33% , which debuted today.

GURU’s goal is to aggregate on a quarterly basis the expertise and knowledge of hedge fund managers into the transparent, cost-efficient and easily accessible format of an ETF—with no minimum investment, according to a statement issued by New York-based Global X.

Home to 52 stocks, GURU is an equal-weight fund as each of its constituents has an allocation of 1.96%. The ETF’s roster includes Apple AAPL -0.26% , Google GOOG -1.41% , Microsof MSFT -0.16% , Kraft KFT -0.13% , J.P. Morgan Chase JPM +3.19% , BHP Billiton BHP +0.59% and Cisco Systems CSCO +0.06% .

GURU tracks the top Guru Holdings Index uses a proprietary methodology to compile the highest conviction ideas 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.  The fund is designed to rebalance quarterly in accordance with the 13F reports to capture any significant position changes, Global X said in the statement. Continue reading →