Goldman Sachs has launched an exchange traded fund strategy that selects some of the top U.S. stock picks of hedge fund managers, allowing retail investors an easy way to track institutional investors’ top plays.
On Thursday, Goldman Sachs rolled out the Goldman Sachs Hedge Industry VIP ETF (NYSEArca: GVIP). GVIP has a 0.45% expense ratio.
GVIP will try to reflect the performance of the Goldman Sachs Hedge Fund VIP Index, which targets 50 “Very-Important-Positions” or U.S.-listed stocks that most often appear in the top 10 holdings of over 650 hedge fund managers, managing $700 billion in equity.
“We’re thrilled to be able to package these high conviction investment ideas from a broad array of professional investors into a cost effective, tax-efficient and convenient ETF wrapper,” Michael Crinieri, Head of ETF Strategies at GSAM, said in a press release.
The new ETF is based on a popular report put out by Goldman analysts Ben Snider and David Kostin in the Wall Street bank’s research division.
“GVIP seeks to track the GS Hedge Fund VIP Index, which is constructed in accordance with a rules-based methodology derived from concepts previously developed by Goldman Sachs’ Global Investment Research division,” according to Goldman Sachs.
Current top holdings include United Continental Holdings (NYSE: UAL) 2.5%, Delta Air Lines (NYSE: DAL) 2.4%, Citizens Financial Group (NYSE: CFG) 2.3%, Level 3 Communications (NYSE: LVLT) 2.3% and Bank of America (NYSE: BAC) 2.3%.[related_stories]
Sector weights include information technology 28.1%, consumer discretionary 18.1%, financials 13.1%, health care 12.6%, industrials 11.2%, telecom services 4.5%, energy 4.0, materials 3.9%, consumer staples 2.1% and real estate 2.1%.
Goldman’s newly filed fund will join a handful of other hedge fund-replication ETFs already in the space. For instance, the Global X Guru Index ETF (NYSEArca: GURU) includes high conviction picks taken from a select pool of hedge fund 13F information. The Global X Guru Activist Index ETF (NasdaqGS: ACTX) takes the guru ETF concept a step further by focusing on companies where an activist investor, such as Bill Ackman or Carl Icahn, is angling for change. The AlphaClone Alternative Alpha ETF (NYSEArca: ALFA) is another option to track hedge fund picks, utilizing a “Clone Score” methodology to pick alpha, or outperformance, potential from institutional-sized investors.
Potential investors, though, should be aware that these types of hedge-fund-clone strategies rely on old data and may not perfectly reflect current hedge fund investor holdings. Hedge fund managers report their U.S. equity holdings, but the 13F disclosures are made public 45 days after the end of each calendar quarter.
For more information on new fund products, visit our new ETFs category.