Highland Capital Management Fund Advisors, the issuer behind the Highland/iBoxx Senior Loan ETF (NYSEArca: SNLN), quadrupled the size of its exchange traded funds lineup today with the introduction of three new ETFs.
Dallas-based Highland Capital’s three new ETFs are the Highland HFR Global ETF (NYSEArca: HHFR), Highland HFR Event Driven ETF (NYSEArca: DRVN) and the Highland HFR Equity Hedge ETF (NYSEArca: HHDG). The new ETFs were designed in collaboration with HFR (Hedge Fund Research, Inc.), according to a statement issued by Highland Capital.
The Highland HFR Equity Hedge ETF tracks the HFRL Equity Hedge Index with the objective of tracking “returns of hedge funds by using a proprietary filtering, monitoring and quantitative selection process to select appropriate securities from a database of hedge fund holdings.”
“A wide variety of investment processes can be employed to arrive at an investment decision, including both quantitative and fundamental techniques; strategies can be broadly diversified or narrowly focused on specific sectors and can range broadly in terms of levels of net exposure, leverage employed, holding period, concentrations of market capitalizations and valuation ranges of typical portfolios,” according to Highland Capital. [Hedge Fund ETFs Love Healthcare Stocks]
The Highland HFR Event-Driven ETF tracks the HFRL Event Driven Index. Like the HFR Equity Hedge ETF, the Highland HFR Event-Driven ETF can hold debt and equity of global and U.S. companies.
“E vent-driven strategies take advantage of transaction announcements and other specific one-time events and utilize an investment process that identifies equity opportunities in companies which are currently engaged in a corporate transaction, such as mergers, restructurings, financial distress, tender offers, shareholder buybacks, debt exchanges, security issuance or other capital structure adjustments,” according to Highland Capital.
The Highland HFR Global ETF benchmarks to HFRL Global Index. That new ETF can also hold bonds and equities of global and U.S. companies. The Highland HFR Global ETF’s strategies may include but are not limited to event-driven, long/short equity, macro, relative value and other strategies commonly used by hedge fund managers,” according to the issuer.
All three new Highland ETFs came to market with $10 million in assets and each charges 0.85% per year.
Hedge fund ETFs have become popular with investors that are attracted to the idea of hedge fund investing without the high fees. Between 2008 and 2014, the alternative mutual funds and ETFs space expanded from 482 products to 1,569, with assets growing to $309 billion from $42.6 billion. [Hire Your Own Hedge Fund With ETFs]
Some hedge fund ETFs use macro, event-driven and other hedge fund strategies while others simply hold stocks that are widely held within the hedge fund community.
The Highland iBoxx Senior Loan ETF, Highland’s first ETF, has $321.6 million in assets under management. Highland is planning 14 more new ETF introductions after the three funds it launched today.