Apart from the Apples and Google of the financial world, Top Hedge Fund Holdings Index carries exposure to global players like Cosan Ltd, the Brazilian ethanol joint which has duly delivered 60% Year to date returns as of 27-12-2012 and a dividend yield of about 2%. Other stocks included are potential market leaders in their respective industries or at least the brightest hedging minds think so.
Market participants world-wide have often expressed desire to invest like hedge funds. Betting money in the stocks that are hand-picked by the brightest of trading minds is simple yet robust logic that may deliver high returns on investments because these fund issuers spend millions of dollars on their quest to find the maximum alpha stocks and then pick the best of the lot. Top holdings GURU INDEX ETF offers you just that; a solo swing that can empower you with a kitty so exclusive that it has top stocks of the most verified hedge funds of the world and even these funds are filtered from top hedging products chosen as per the bona-fide findings of the software developed under license by AG & G Structured Solutions.
How the index works?
To replicate the tactics being practiced by the top investors, GURU index uses the information provided through the procedure of 13F filings which all asset managers managing more than $100 million are mandated to file within 45 days after the end of each quarter or in simple words they are bound to make their top holdings public at the end of every quarter. These funds are then further screened as per their trading antics and portfolio stability, for example if fund is frequently changing its top assets then it may not be coveted enough to join the benchmark.
Once decided on the hedge funds, then top holding from each of the chosen fund is given equal weightage i.e. 2% and 50 stocks that are potentially the highest alpha yielding securities among all globally listed companies make up for the index and its performance.
A Top Hedge Fund Holdings ETF is designed to exactly replicate the assets of the parent index and withers as per the performance of the equities that it is made of. Of course an operating cost which may vary from 75 to 95 basis points is involved but it still much lower than the 2% fees charged by most good hedge funds. If you also consider the 20% of the performance fees then these ETFs may seem like a huge bargain.
Equity wise you get your shares in the likes of BHP Bilton which is a respected senior miner, AIG, American Movil and other household names like Facebook Inc., Delphi Auto and Google Inc. Sector-wise index is heaviest on technology [22%] trailed by Financials [18%] and Industrials [22%].
Common downsides for this asset class are the opinions that the 13F Filings are not real time and it's possible that at the time of declaration particular fund has already sold the security. Some believe that owing to a lax in regulatory procedures some of the top hedge managers will never disclose their complete assets thus raising questions on the authenticity of the stock pool.
Hedge Fund ETF or a GURU fund provides an excellent chance to investors wanting to duplicate some of the most successful moves and strategies of the financial world. This trait simply allows a secure portfolio comprising of widely disclosed equity holdings of certain hedge funds which is other-wise complicated to acquire through direct investments. With street sentiments bound to improve in 2013 and further, there is lot of money to be made by simply sailing with the stronger and sounder winds.
Invest like hedge fund attunes to the performance of the name sake index and replicates the index comprised equities with equal weightage of close to 2% each. The fund operates at an expense of 0.75 basis points and the current top three equities are Education Management Corporation [2.96%], Vivus Incorporated [2.72%] and Quad Graphics Incorporated [2.64%].