The exchange traded fund industry has offered products that try to incorporate hedge fund-like strategies. On Thursday, a new player on the block, AlphaClone, launched the first ETF to specifically track disclosed positions of hedge fund managers.
AlphaClone Alternative Alpha ETF (NYSEArca: ALFA) tries to reflect the performance of the AlphaClone Hedge Fund Long/Short Index, which follows U.S. equities that hedge funds and institutional investors have disclosed significant exposure to. The equity components are selected from managers with the highest rankings. ALFA has an expense ratio of 0.95%.
According to a press release, the ALFA ETF will provide access to alpha-generation from established hedge fund managers within a transparent investment vehicle.
“AlphaClone offers our separate account clients strategies that expertly combine long hedge fund equity positions with disciplined downside protection,” says Mazin Jadallah, founder and CEO of AlphaClone, said in the press release. “With the introduction of ALFA, investors around the world can now access our proven investment approach in a transparent and easy to access vehicle that can help navigate today’s challenging market environment.”
The underlying Index is equal weighted but may have an overlap bias – if more than one manager holds the same security, the security’s weighting is multiplied. The Index is also reconstituted quarterly and may range from being long only to market neutral, or have up to 50% exposure to inverse unleveraged ETFs.
For more information on long/short funds, visit our long-short ETFs category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.