In July, it became official that exchange traded products, including ETFs, are now home to more assets under management than hedge funds and hedge funds are big reason why as they are among the scores of professional investors boosting usage of ETFs.
John Paulson’s Paulson & Co. has long been a major holder of the SPDR Gold Shares (NYSEArca: GLD) while Tudor Investment Corp., the hedge fund run by Paul Tudor Jones, owns stakes in the iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSEArca: LQD) and the iBoxx $ High Yield Corporate Bond ETF (NYSEArca: HYG). Those are just two examples of well-known hedge funds using ETFs. [Hedge Fund Trades out of Corporate Bond ETF]
Ray Dalio’s Bridgewater Associates, one of the world’s largest hedge funds, is a major holder of the Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO) and the iShares MSCI Emerging Markets ETF (NYSEArca: EEM), the two largest emerging markets ETFs by assets.
Speaking of EEM, it is a hedge fund favorite.
“At the end of June, 34 funds from our database held around $4.21 billion worth of shares of EEM, significantly above 27 funds with $3.65 billion in shares at the end of March. Some of the investors that bet on a turnaround in the emerging markets include Kevin Michael Ulrich And Anthony Davis’ Anchorage Advisors and Soros Fund Management, both of whom initiated positions with ‘Call’ options underlying 2.50 million shares and 2.0 million shares of the ETF,” according to Insider Monkey, which tracks positions held by well-known hedge funds.
The Market Vectors Gold Miners ETF (NYSEArca: GDX), the largest gold miners ETF, is another ETF that the hedge fund crowd has widely embraced. [Commodities Crushed: Investors are Running Away From Commodities ETFs]