The need of the hour or more rightly each hour seems to be minimizing risks and maximizing profits. In order to quench this wish the investors start a drive to identify stocks that yield them a full alpha. Theoretically Alpha is the surplus return of an asset in correspondence to its benchmark index.
Aggressive and advanced strategies to manage investments in a portfolio call for high risk methods. Only a few would want to adopt this approach after the markets facing a brunt of the European crisis. One clever method is to benefit from disclosures made by some of the brightest minds through 13F Declarations; all big institutional investors or hedge fund issuers who have more than $100 million worth of transactions are directed by Securities and Exchange Control [SEC] to make their top equity assets public after the end of each quarter within a stipulated time frame of 45 days.
GURU ETF scouts for the best of the stocks that are declared by the top money managers in their 13 F listings, and then picks the best of the lot (all under equal weight age) through logical calculations of a trade mark data software . This data program is developed by AG& G Structured Solutions, Germany; the same company is responsible for making similar systems for standard benchmarks like S and P.
Investors can research through 13F filings themselves as these declarations are made public, one may find good online references on or, those who deem it as unnecessary can directly invest in a fund that gives you a stable and equal exposure to the top 50 picks that are available among the assets of the best hedge funds worldwide and delivers as per the performance of the Solactive Guru Index.
Your portfolio will reflect big names without paying high expenses of 2% plus a 20% on profits which is a norm with most good hedge fund investments. The annual expenses with these benchmark bound ETFs hover around 0.75% – 0.80% and low operational expenses is one of the biggest winners for this product and main reason for growing investor attention towards it.
A top hedge fund holding ETF follows a reshuffle quarterly, after the hedging managers make their equity disclosure; the fact doesn’t go well with some skeptics who believe that at the time of the declaration, the stock may not be as attractive when the fund bought it as the news is almost +4 months old. Other notable downside could be that the better stocks are not given higher weight age.
Being pure play products, most hedge fund ETF assign 2% asset-allocation to each security due to the exposure uniformity in the benchmark itself.
Stocks that are acquired are understandably among the best in the world. Dependence on technology is third highest and along with the heavy weights like Google Inc. and Facebook equities like the magna chip semiconductors and NXP semiconductors are also included. Heaviest sectors are the financials and industrials; together they make up for the 38% of the Index.
The guru index and its related funds were introduced in 2012 and its past performance has been quite encouraging. Although since inception, the index has delivered a cumulative return of 23.41%, what it will churn out in the long term future remains to be seen.