GVIP’s 10.7% gain year to date through May 4 was ahead of the S&P 500’s 7.4%. While constructed from the bottom up, information technology (32% of assets) and consumer discretionary (27%) stocks are most prominently held. Consumer staples (4%) and industrials (4%) stocks were underweighted relative to the S&P 500. There are currently 19 stocks that were now in the ETF at the end of 2016, including CFRA buy recommended FleetCor Technologies (FLT) and Lowe’s (LOW). We are interested to see if these stocks remain in the ETF going forward.
Global X Guru ETF (GURU), with approximately $60 million in assets, but down from a year earlier is a more established way individuals can invest in stocks held by hedge funds. GURU launched in 2012 and is comprised of the top US listed equity positions reported on Form 13F by a select group of hedge funds that the index provider Solactive deems as having moderate turnover rates and other characteristics.
While the sector exposure and some of the holdings of GURU are different, the ETF has also started 2017 off well, rising 9.4%. Many consumer discretionary (22% of assets) and information technology (20%) stocks are inside, but those weightings are lower than for GVIP. Meanwhile, the consumer staples (10%) and industrials (10%) exposure is larger than its peer. The two ETFs have overlapping securities, including CFRA buy recommended Amazon.com (AMZN) and Facebook (FB). However, GURU alone currently holds construction and engineering company Dycom Industries (DY); GURU is also reconstituted on a quarterly basis.
Meanwhile, IQ Hedge Multi Strategy (QAI) has $1 billion in assets. QAI, attempts to replicate the risk-adjusted return characteristics of hedge funds using various hedge fund investment styles, including long/short equity, global macro, market neutral, event-driven, fixed income arbitrage and emerging markets. QAI is rebalanced monthly and holds other ETFs such as Vanguard Short-Term Bond (BSV) and Deutsche X-trackers MSCI Europe Hedged Equity (DBEU) and not individual stocks.
Todd Rosenbluth is Director of ETF & Mutual Fund Research at CFRA.