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Tuesday, March 31st, 2015


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Young investors can access hedge fund strategies using ETFs

Various exchange traded funds (ETFs) offer investors the opportunity to gain exposure to hedge funds, and ETF providers are submitting proposals to the Securities and Exchange Commission (SEC) in an attempt to obtain approval for similar funds. Various exchange traded funds (ETFs) offer investors the opportunity to gain exposure to hedge funds, and ETF providers are submitting proposals to the Securities and Exchange Commission (SEC) in an attempt to obtain approval for similar funds. 

The first ETF to offer investors with exposure to hedge funds recently celebrated its third anniversary, according to a statement released by custom investment solutions provider IndexIQ.

IndexIQ created the financial instrument with the intention of providing retail investors with access to investment strategies utilized by hedge funds.

The ETF has the investment objective of the tracking the IQ® Hedge Multi-Strategy Index, before fees and expenses. The security provides users with exposure to hedge funds that utilize a wide range of asset management styles – including emerging markets, long/short equity, fixed income arbitrage, global macro and event-driven.

The fund also provides market participants with an option that is highly illiquid and transparent.

"We launched the IQ Hedge Multi-Strategy Tracker ETF in 2009 with the goal of making a whole new asset class available to the average investor," Adam Patti, chief executive officer of IndexIQ, said in the statement. "Before the launch of QAI, hedge fund investing was generally limited to institutions and high net worth individuals."
ETF provider Global X recently submitted a prospectus to the SEC, which outlined information related to four proposed funds that would track the performance of hedge funds, according to ETF Trends. The four proposed funds would be based on indices created by custom investment solutions provider Structured Solutions AG.

The Global X Top Activist Investor Holdings ETF will be based on the Solactive Top Activist Investor Holdings Index, and will provide market participants with the ability to gain exposure to investment strategies executed by activist investors.

IndexIQ is also seeking approval for a fund named Global X Top Hedge Fund Equity Holdings ETF, which has the objective of duplicating the performance of the Solactive Top Hedge Fund Equity Holdings Index before fees and expenses.

The Global X Top Value Guru Holdings ETF, which is based on the underlying Solactive Top Value Guru Holdings Index, seeks to provide investors with exposure to returns generated by specific value investors.

The Global X Listed Hedge Funds ETF will be based on asset managers listed in the Solactive Listed Hedge Funds Index, and will put funds into shares and global depository receipts of hedge funds that are publicly traded.

ETFs should be of particular interest to young investors, as they offer exposure to a wide range of assets with a small initial capital outlay.

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