The Global X Top Guru Holdings Index ETF (GURU) remains a relatively small one-year-old ETF with just over $38 million in total assets, but still, it has been growing rapidly this year, with assets up by more than 1,000 percent year-to-date.
Investors have poured more than $36 million into GURU since Jan. 1, and the fund climbed 22.7 percent in value year-to-date—a strong performance considering that the S'P 500 Index’s rise to record levels has lifted it 16 percent so far this year.
GURU is a U.S. equities fund that tracks what the so-called “smart money” is doing by looking at hedge fund managers’ “13F filings.” The portfolio, which is rebalanced quarterly, invests in top equity positions reported to the Securities and Exchange Commission by a select group of hedge funds, as identified by the fund’s Germany-based index provider Structured Solutions.
Hedge fund managers are required to report their equity holdings to regulators through 13F filings that have to be submitted to the SEC no more than 45 days after the end of a given quarter. That means that by the time a 13F filing is at the SEC, the information in it might be old. Managers are also not required to report short or derivativelike positions.
The quick growth of GURU has been mostly performance-driven, Global X’s Research Analyst Alex Ashby told IndexUniverse.com, arguing that investors appeared to be interested in GURU’s methodology from the get-go, but it took some strong performance to really get them hooked.
Since the fund came to market on June 5 of last year, it has rallied some 48.5 percent, which compares to a 31 percent rise in the S'P 500 in the same period.
“This performance has in a way validated the concept behind the fund; it has generated alpha relative to the S'P 500,” Ashby said. “I don’t think this has anything to do with timing or sudden interest in hedge fund holdings. I think it’s performance-driven interest in the fund.”
GURU is one of only a handful of ETFs that craft their portfolios based on hedge fund positions.
The Alpha Clone Alternatives Alpha ETF (ALFA), and the IndexIQ Hedge Multi-Strategy Tracker ETF (QAI)—the biggest in the space with $406 million in assets—are each up year-to-date, by 15 percent and 2 percent, respectively.
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