Hedge funds are private investment funds that invest in a range of assets with a variety of investment strategies. Their assets can be non-traditional: Commodities, convertables, timbers, private equity or private RETIs, to name just a few. Their strategies range from traditional long-only strategies to hedging strategies that are intended to protect the fund's investors from downturns in the market while maximizing returns on market upswings. Hedge funds are favorite investment vehicles for high net-worth individuals and institutions.
Hedge fund-style ETFs have been introduced to markets recently. These ETFs offer a number of advantages over traditional hedge funds. These include enhanced transparency, liquidity (no lock-up period) and significantly lower fees (no performance-based fee, for example). In light of recent market volatilities, such funds with downside protection or less correlation with traditional asset classes can be of interest to investors in their portfolio building. In fact, in Europe, hedge funds are often considered to be a separate asset class. This might or might not be appropriate, but it does tell the importance of hedge funds in asset allocation.
Please find below the table of hedge fund ETFs.
Description | Symbol | 1 Yr | 3 Yr | 5 Yr | Avg. Volume (K) | 1 Yr Sharpe |
IQ Hedge Multi-Strategy | QAI | 5.96% | NA | NA | 48 | 126.17% |
ProShares Credit Suisse 130/30 | CSM | 18.9% | NA | NA | 22 | 117.14% |
PowerShares S&P 500 BuyWrite | PBP | 3.01% | -4.99% | NA | 34 | 31.44% |
Credit Suisse Merger Arbitrage | CSMA | NA | NA | NA | 24 | NA |
Mars Hill Global Relative Value | GRV | NA | NA | NA | 13 | NA |
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