The rise of ETFs has led to the democratization of many asset classes which were once reserved for the ultra-rich. While investors have quickly adapted to ETFs offering exposure to commodities and quantitative strategies, another alternative asset has also seen a recent surge in popularity. Traditionally, hedge funds have been known for their ability to deliver strong returns with low volatility and low correlations to other asset classes. These returns often come in return for big fees; hedge funds generally charge 2% of assets per year plus 20% of profits, enabling fund managers to live handsomely off of profitable investments. Furthermore, some hedge funds require that their investors earn a minimum amount of money annually and have a net worth of more than $1 million, thereby limiting the universe of available investors. [click to continue…]
Credit Suisse, one of the world’s largest financial services providers, announced Monday the launch of the Credit Suisse Long/Short Liquid Index (Net) ETN (CSLS), a product designed to correlate to the performance of the Credit Suisse Tremont Long/Short Equity Hedge Fund Index. But the new ETN achieves hedge fund-like exposure in a unique manner. The index to which CSLS is actually linked, the Credit Suisse Long/Short Liquid Index, is designed to reflect the return of a basket of 18 liquid, investable market factors. These factors are then selected and weighted monthly in accordance with an algorithm that aims to track the performance of the Credit Suisse/Tremont Long/Short Equity Hedge Fund Index. [click to continue…]
Last year saw more than 100 new product launches, ranging from plain vanilla equity and bond funds to ETFs offering exposure to exotic new investment strategies and asset classes previously available only to a limited slice of the investing community. The innovation that has made ETFs a popular alternative to mutual funds seems ready to [...]
IndexIQ, the Rye Brook, New York-based issuer who burst on to the scene with the launch of the first hedge fund ETFs in 2009, announced this week that it would make zero capital gains distributions for all five of its funds. IndexIQ has found a sizable market for its hedge fund replication ETFs (QAI has [...]
San Francisco-based iShares, the market leader with more than 185 U.S. listed ETFs, announced on Monday the launch of its latest product, the iShares Diversified Alternatives Trust. Unlike most iShares products that seek to track the performance of an underlying benchmark, the Diversified Alternatives Trust seeks to maximize absolute returns from investments with historically low [...]
IndexIQ, the New York-based developer of alternative indexes and exchange-traded funds, has taken the first step towards launching a 130/30 ETF, filing a 40-APP application with the SEC earlier this week. IndexIQ currently maintains the IQ 130/30 Index, a rules-based benchmark that employs fundamental factors to select U.S. stocks with a long exposure of 130% [...]
Having been given the option, the vast majority of investors in storied hedge fund Cerberus Capital Management have opted to liquidate their holdings, rather than roll over their investments to a new Cerberus fund. The development is a blow to fund manager Stephen Feinberg, and on a higher level, to the hedge fund industry as [...]
ProShares, known for introducing leveraged ETFs and inverse leveraged ETFs to the market in 2006, has introduced another unique style of fund, launching the ProShares Credit Suisse 130/30 ETF (CSM). CSM, which began trading on the NYSE Arca Exchange on Tuesday, is the first ETF on the market to follow a 130/30 strategy. The ETF seeks to track the Credit [...]
Over the last two years, equity markets have cratered, volatility has skyrocketed, and retirement portfolios have been crushed under the weight of a global recession and seemingly unending uncertainty. But over this period, the ETF industry has enjoyed astonishing success, attracting billions of dollars away from traditional mutual funds and redefining the business of long-term [...]
As the ETF industry expanded over the last several years, the market quickly became saturated with funds tracking traditional equity, fixed income, and commodity benchmarks. Once the major indexes had been covered (and in many cases recovered), ETF issuers began getting more creative, launching funds in unique niches of the market, hoping to establish themselves as [...]
With an astounding rate of hedge fund closures coinciding with the introduction of hedge fund ETFs to the market, I wrote last week that we may see a gradual changing of the guard in the industry. I might have been wrong. It might not be so gradual. Over the last week, several new niche hedge fund [...]
The extent of the damage done by the current recession may not be fully known for years, but already a number of the hardest-hit industries are evident. The U.S. banking sector will never be the same. The domestic automotive industry has been dealt potentially fatal blows (perhaps taking the state of Michigan with it). Real [...]
