It probably is not surprising, but with 13F filing season underway, it is obvious that the exchange traded funds most favored by hedge funds are also some of the largest ETFs by assets.
The lone ETF that ranked among the five largest hedge holdings at the end of the first quarter was Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO), the largest emerging markets ETF by assets and fourth-largest ETF overall, reports Geoffrey Rogow for the Wall Street Journal.
The $44.5 billion VWO charges 0.15% per year, making it cheaper than 90% of rival funds, according to Vanguard data. Home to 960 stocks, VWO allocates a combined 48% of its weight to China, Brazil and Taiwan.
In addition to VWO, the top-five ETFs held by hedge funds at the end of the first quarter were the SPDR S&P 500 ETF (NYSEArca: SPY), SPDR Gold Shares (NYSEArca: GLD), iShares MSCI Emerging Markets ETF (NYSEArca: EEM) and the iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSEArca: LQD), according to the Journal.
SPY is the largest ETF in the world while EEM and GLD are the seventh- and eighth-largest U.S.-listed ETFs, respectively. LQD is the second-largest bond ETF behind the Vanguard Total Bond Market ETF (NYSEArca: BND). [ETFs for Rising Rates]
John Paulson’s Paulson & Co. held 10.23 million shares of GLD at the end of the first quarter, making the hedge fund the largest hold of the gold ETF. [Paulson, Soros Still Love Gold ETFs]
Although it has recently taken in assets, the iShares Russell 2000 ETF (NYSEArca: IWM), the largest small-cap ETF has fallen out of favor with hedge funds in recent quarters. AlphaClone data “shows that the small-cap iShares Russell 2000 exchange-traded fund went from 11th most popular holding in third quarter of 2013, to the 13th most popular in the fourth quarter to the 18th most popular in the first quarter,” the Journal reported.
Other ETFs owned by hedge funds include the Market Vectors Gold Miners ETF (NYSEArca: GDX) and the Energy Select Sector SPDR Fund (NYSEArca: XLE). Filings indicate Soros Fund Management and David Einhorn’s Greenlight Capital maintained GDX stakes in the first quarter with Soros adding to its position in the largest gold miners ETF. Soros also had a position in XLE.
Vanguard FTSE Emerging Markets ETF
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of EEM, GLD, IWM, LQD and SPY.