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Four Hedge Fund ETFs Your Broker Forgot To Tell You About


Four Hedge Fund ETFs Your Broker Forgot To Tell You About

Some kids grow up dreaming about becoming movie stars or athletes. That's understandable, but some adults (and maybe some kids, too) fantasize about becoming hedge fund managers.

If you've ever found yourself day-dreaming about becoming the next Steven Cohen or Bill Ackman, no one would blame you. After all, those guys have more money than most movie stars and athletes. Still, realizing that dream is easier said than done, but if you want to play hedge fund manager with your own portfolio, there's an ETF for that.

Actually, there are plenty of hedge fund replication ETFs, many of which your broker forgot to mention. Here a few funds that will help channel your inner hedge fund guru.

iShares Diversified Alternatives Trust (NYSE: ALT): The iShares Diversified Alternatives Trust makes no bones about it. Right there on the iShares Web page, this ETF is described as NOT a traditional ETF. The objective of the iShares Diversified Alternatives Trust is to “maximize absolute returns from investments with historically low correlation to traditional asset classes while seeking to control the risks and volatility inherent in futures and forward contracts by taking long and short positions in historically correlated assets,” according to iShares.

Nearly two years old, ALT has done a fine job of attracting assets with nearly $128 million undeer management. Just be aware of the high expense ratio at 0.95%.

IQ Hedge Fund Multi-Strategy Tracker ETF (NYSE: QAI): The IQ Hedge Fund Multi-Strategy Tracker ETF seeks to deliver a performance that is comparable to the hedge fund universe at large. These days that might not be such a good thing as some of the biggest names in the hedge fund game are struggling to generate alpha. QAI uses myriad strategies, including long/short equity, fixed income arbitrage, global macro and emerging markets to accomplish its objective.

Perhaps the biggest advantage with the IQ Hedge Fund Multi-Strategy Tracker is that IQ Global is one of the top issuers of hedge fund ETFs and in a favorable market environment, QAI has legitimate alpha-generating potential.

ProShares Hedge Replication ETF (NYSE: HDG): ProShare is the biggest issuer of inverse and leveraged ETFs, so the ProShares Hedge Replication ETF is somewhat of a departure for this ETF issuer. HDG is still less than two months old, but the approach is novel as this new ETF tracks an index that follows a universe of 2,000 different hedge funds.

IQ Merger Arbitrage ETF (NYSE: MNA): As we have noted many times in the past, the IQ Merger Arbitrage ETF is not a play on increased mergers and acquisitions activity. MNA is an arbitrage play on companies for which public takeover announcements have already been made. The index that the IQ Merger Arbitrage ETF tracks also includes a short position in global stocks as a hedge.

Posted-In: Long Ideas News Broad U.S. Equity ETFs Short Ideas Specialty ETFs New ETFs Hedge Funds Intraday Update


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