More ETFs Play Hedge Fund Copycat
New hedge fund look-alike ETFs go beyond existing strategy-based ones by seeking to replicate holdings. But whether they really do that is open to debate.
By Maureen Nevin Duffy
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What if you could emulate the actions of the most successful hedge fund managers for a fraction of what they cost? Two ETFs that debuted this summer are trying to do that by using public filings to replicate their portfolios. And a third, which launched early this month, promises to add another hedge fund dimension to ETF copycats by adopting what its sponsor calls the only true market-neutral strategy in the lot.
Researchers have been trying to emulate hedge fund strategies since the 1990s. But the first mutual fund to do so, Index IQ’s Alpha Hedge Strategy Fund (IQHIX), didn’t launch until June of 2008. It has since outperformed the S&P 500 TR, an ETF based on the index, which is in red so far this year and for the past 12 months and 3 years, whereas IQHIX is up 4.8 percent, 6.9 percent and 2.6 percent, respectively, for the same periods.....