Exchange traded funds adhering to the strategy of following Wall Street legends and big-name hedge fund managers into equity positions have taken their lumps since bursting on to the ETF scene a couple of years ago.
The most oft-cited criticism is that the 13F filings from the Securities and Exchange Commission that discloses positions held by noteworthy investors and hedge funds is published 45 days after a quarter ends. That means the big investor could pared or eliminated a position just as the regular investor is learning that the position existed in the first place.
Worthy of critique or not, it is impossible to argue with the returns offered by the Global X Guru Index ETF (NYSEArca: GURU), which celebrated its second anniversary in June. Since coming to market, GURU has topped the S&P 500, a feat the ETF repeated in the second quarter. [Play Hedge Fund Manager With These ETFs]
The S&P 500 returned over 5.2% during the quarter, while in contrast, GURU returned 7.1%. Guru has outpaced the S&P 500 since the fund’s inception on June 4, 2012 87.17% versus 59.47%, according to New York-based Global X.
GURU has been on the market for just 26 months, but investors have allocated $488.5 million to the fund as of Aug. 5.
“GURU taps into high conviction stock holdings found in the 13F filings of a select group of large hedge fund managers, using a proprietary methodology to sort through their long equity positions.” said Global X in a statement.
Top-10 holdings in the ETF currently include Baidu (NasdaqGS: BIDU), Micron Technology (NasdaqGS: MU), YPF (NYSE: YPF), America Movil (NYSE: AMX) and Priceline (NasdaqGS: PCLN).
“Over the past year, GURU has ranked among the top 20% U.S. Large-Cap Core funds, according to Lipper, Inc. Additionally, GURU was ranked by Bloomberg as the ‘Best Niche ETF” in 2013,’ said Global X.
GURU has been so successful that Global X has taken the concept even further with the Global X Guru Small Cap Index ETF (NYSEArca: GURX) and the Global X Guru International Index ETF (NYSEArca: GURI), both of which debuted in March. Like GURU, GURI and GURX charge 0.75% per year. [New Guru ETFs Debut]
Global X Guru Index ETF
ETF Trends editorial team contributed to this post.
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.