This launch follows that of AlphaClone Altertnative Alpha ETF (NYSEArca: ALFA), which is a passively managed fund that employs the same methodology of GURU. However, ALFA also equally weights its holdings but with an overlap bias, so holdings with twice the number of holders gain twice the weight, reports Goldsborough.
The idea to give individual investors the same investment opportunity that wealthier hedge fund managers have access to is the intention. GURU charges 0.75%, which is much more affordable than the typical 2% management fee and 20% performance fee that a hedge fund charges.
The financial result of a hedge fund can be a mirage, due to the fact that once GURU gains the information about public holdings of a certain fund, the hedge fund has long been in position of them. There is about a 45-day lag time between the hedge fund and the ETF.
Tisha Guerrero contributed to this article.