Investors get the change to bank on top investment ideas at the fraction of a cost – hedge funds require a standard 2% of assets and 20% of profits, whereas GURU charges a 0.75% expense ratio.
Currently, some of the ETF’s more familiar holdings include names like Microsoft, Apple, JPMorgan and American International.
Nevertheless, Sizemore lists some caveats:
- ETFs only track listed stocks publicly traded on exchanges. Institutional investors may acquire positions in private companies.
- While GURU’s holdings are equally weighted, higher positioned stocks are provided no greater weighting and the risk-management aspects of a position sizing are not factored in.
- The ETF only follows long positions. Institutional investors may follow pair trades, and the ETF managers would not know about these positions.
- The Form 13-F is not provided daily, so the ETF’s positions come with a time lag – a guru hedge funder may no longer have their stated holdings.
- Like most new ETF products, GURU currently has very little assets under management and low trading volume.
For more information on hedge funds, visit our hedge fund category.
Max Chen contributed to this article.