Changing Landscape Could Pressure Hedge Funds and Boost “GVIP” ETF

Covid-19 is just one of the many market forces that are changing the way funds do business and the hedge fund industry isn’t immune to these changes. However, these challenges could apply pressure on hedge funds to perform, which could help boost the Goldman Sachs Hedge Industry VIP ETF (GVIP).

“The global hedge fund industry is currently facing a number of headwinds, from fee pressure, increased redemptions and liquidations, to the decreasing new fund launches as investors around the world look towards defensive strategies, according to a new report from,” a Hedgeweek article noted. “But despite the tough times, the industry saw a double-digit annualized return in 2019 for the first time in the past six years.”

A Global Hedge Fund Industry: Growth, Trends, and Forecasts 2020-2025 report addressed some challenges that the hedge fund industry could be facing and how they’re addressing these new roadblocks. One way is by utilizing next-level technology, such as artificial intelligence and machine learning—two disruptive technology trends that could boost future returns.

“Fund managers are also increasingly applying artificial intelligence & machine learning (AIML) techniques to improve operational efficiencies and boost returns,” the Hedgeweek article said.

GVIP Chart

GVIP data by YCharts

Tailing Hedge Fund Bets

GVIP seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the Goldman Sachs Hedge Fund VIP Index. The fund seeks to achieve its investment objective by investing at least 80% of its assets in securities included in its underlying index, in depositary receipts representing securities included in its underlying index and in underlying stocks in respect of depositary receipts included in its underlying index.

Moreover, the index is designed to deliver exposure to equity securities whose performance is expected to influence the long portfolios of hedge funds.

GVIP gives investors:

  • Top-notch hedge fund ideas: 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. The Index consists of fundamentally driven hedge fund managers’ “Very-Important-Positions,” which appear most frequently among their top 10 long equity holdings.
  • Dynamic market ideas in today’s landscape: GVIP offers investors a way to follow hedge fund managers’ most important long equity ideas and gain exposure to dynamic market themes. The Index constructs a focused, US-listed stock portfolio of approximately 50 holdings that can complement a core equity portfolio.
  • Market resources and data from Goldman Sachs: GVIP capitalizes on the extensive resources of a leading global investment firm and pioneer in the analysis of investing trends in the hedge fund universe to offer investors access to an advanced investment solution through a low-cost ETF.

For more market trends, visit ETF Trends.