Global X Plans Hedge Fund ETFs

by on March 30, 2012 | ETFs Mentioned:

Equity indexes crept lower throughout the week as investors were unhappy to digest a number of worse-than-expected economic data releases. Slight drop-offs in consumer confidence and durable goods orders were enough to spark a wave of profit taking on Wall Street. Global X filed with the SEC to bring to market a basket of hedge fund-line ETFs as investors’ appetite for uncorrelated sources of returns continues to grow [see also Special Report: Alternative ETPs In focus].

The New York-based issuer is planning to bring to market four ETFs, each with a compelling strategy [see SEC Filing]:

  • Global X Top Hedge Fund Equity Holdings ETF: This fund will track an index comprised of the top U.S. listed equity positions held by a select group of the world’s largest hedge funds. The underlying portfolio will be rebalanced quarterly based on regulatory filings from the given hedge funds with the SEC. Additionally, the stocks are screened for liquidity and are equally weighted.
  • Global X Top Value Guru Holdings ETF: This fund will track an index comprised of the top U.S. listed equity positions held by a select group of the world’s premier value investors. The underlying portfolio will be rebalanced quarterly based on regulatory filings from the given value investing gurus with the SEC. Additionally, the stocks are screened for liquidity and are equally weighted.
  • Global X Top Activist Investor Holdings ETF: This fund will track an index comprised of the top U.S. listed equity positions held by a select group of the world’s premier activist investors. The underlying portfolio will be rebalanced quarterly based on regulatory filings from the given activist investors with the SEC. Additionally, the stocks are screened for liquidity and are equally weighted.
  • Global X Listed Hedge Funds ETF: This is a unique fund that will be comprised of securities, ADRs, and GDRs of publicly listed hedge funds globally. The component securities will be screened for liquidity and weighted according to their modified free-float market capitalization.
Global X did not disclose trading tickers or expense ratios for these products.

Hedge Fund ETFs In Focus

With nearly a dozen of offerings to choose from in the Hedge Fund ETFdb Category, it’s not much of a surprise to see Global X taking strides to carve out a name for themselves in the space. WDTI, which offers exposure to a managed futures strategy, is currently the biggest ETF in the space with close to $240 million in assets under management. The second most popular offering come from IndexIQ, in the form of QAI; this ETF has about $200 million in assets under management and offers exposure to various hedge fund strategies, including long/short equity, global macro, market neutral, and fixed income arbitrage.

Global X will certainly face some stiff competition from more established hedge fund ETFs. Nonetheless, the ETF industry thrives on competition as it means better, cheaper, products for mainstream investors. Cost conscious investors looking for uncorrelated sources of returns should check out the Cheapskate Hedge Fund ETFdb Portfolio.

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Disclosure: No positions at time of writing.