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 (NYSE:
), 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 (Nasdaq:
), Google (Nasdaq:
), Microsof (Nasdaq:
), Kraft (NYSE:
), J.P. Morgan Chase (NYSE:
), BHP Billiton (NYSE:
) and Cisco Systems (Nasdaq:
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.
Piggybacking the elite hedge fund managers sounds like a good
idea, but what makes this endeavor tricky is these managers may
already be out of certain stocks by the time the 13F's are filed.
Not to mention, not all hedge fund legends are legendary all the
time. Sure, David Einhorn has been of fire as of late, but John
Paulson's eponymous Paulson & Co. struggled through a nasty
In GURU's defense, it charges just 0.75% per year and all of
the profits are the investor's to keep. At least that's a better
deal than one would get with the typical hedge fund.
Other hedge fund ETFs include the newly minted AlphaClone
Alternative Alpha ETF (NYSE:
), the IndexIQ Merger Arbitrage ETF (NYSE:
) and the IndexIQ CPI Inflation Hedge ETF (NYSE:
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