Four Alternative ETFs Your Broker Forgot to Mention
In an environment where even some of the largest, most prestigious hedge funds are struggling to generate positive returns, it may not seem like the ideal time to be looking at ETFs that replicate alternative investment strategies.
Yet some of these funds have success in recent years and a cooperative market setting, they're fine ideas for helping the “average investor” get the hedge fund experience without getting the hedge fund cost. And while this area of the ETF universe has grown, it is still obscure territory for many investors.
With that, let's have a look at four alternative ETFs your broker forgot to mention.
iShares Diversified Alternatives Trust (NYSE: ALT) The iShares Diversified Alternatives Trust is nearly two-years old and has attracted more than $121 million in assets under management, a pretty good haul for an ETF of this nature. ALT's aim is to generate returns from holdings that are not correlated to traditional asset classes. Problem is almost everything is correlated these days. The ETF holds a mix of Eurodollar futures, index futures and interest rate swaps among others. An expense ratio of 0.95% is high, but expected with alternative ETFs.
AdvisorShares Dent Tactical ETF (NYSE: DENT): The Dent Tactical ETF is an ETF based on Harry Dent's method for long-term economic forecasting based on demographic trends, according to the AdvisorShares Web site. DENT, which celebrated its second birthday last week, has attracted over $15 million in AUM and is home to a high expense ratio of 1.5%. Welcome to the world of actively managed ETFs. Consider DENT an ETF fund of funds as the ETF investors in a variety of other exchange-traded products.
AdvisorShares Active Bear ETF (NYSE: HDGE): Now this should be one to embrace in the current market environment. HDGE made its debut in late January and has already garnered more than $83 million in AUM, putting it in the upper echelon of ETFs that have debuted in 2011. HDGE shorts stocks with poor earnings momentum and looks to exploit those names on the downside ahead of and after poor earnings announcements. Even with the 1.85% expense ratio, HDGE is one to warm to if the bears continue to growl.
IndexIQ Macro Hedge Tracker ETF (NYSE: MCRO): MCRO attempts to replicate a risk-adjusted hedge fund macro strategy and emerging markets strategy, according to IndexUniverse. Like DENT, MCRO is sort of an ETF fund of funds. MCRO's top three holdings are the iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE: LQD), the Vanguard MSCI Emerging Markets ETF (NYSE: VWO) and the iShares MSCI Emerging Markets Index Fund (NYSE: EEM). Expense ratio: 0.75%.
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