Hedge Funds ETF Overview

Hedge funds are private pools of capital organized in a limited partnership. They are associated with high risk and sophisticated strategies to realize large gains.

The most common hedge fund category is absolute-returns funds. These funds aim to reach a predetermined rate of return regardless of the market environment. Their role is not to replace equity exposure but to improve the risk/return profile of a portfolio.

Recently, several ETFs have started to mimic these hedge fund strategies. Hedge fund ETFs include funds in the following categories:

  • Broad-Based Hedge Fund Replication
  • Long/Short ETFs
  • Managed Futures ETFs
  • Merger Abitrage ETFs
  • Real Return Funds

Index Investor Corner

Swedroe: Hedge Funds Lag In 2Q

They fail to beat a traditional diversified stock/bond portfolio.

Index Investor Corner

Swedroe: All Those Factors Shrink Alpha

As alpha becomes more explainable, it turns into beta.

Daily Hot Reads

Friday Hot Reads: Time To Kill Off The 3-ETF Portfolio

Also, Morningstar on best way to build a multifactor fund.

Daily Hot Reads

Wednesday Hot Reads: ETFs – A Derivative By Any Other Name

Also, gold less prone to turmoil as ETF cash eases prices swings.

Index Investor Corner

Swedroe: Hedge Funds Trail Equities

A review of how hedge funds performed in the first quarter of 2017.

Features and News

Making Money With Contrarian ETFs

Funds ‘HDGE’ and newcomer ‘SQZZ’ swim against the tide in search of returns and downside protection.

Daily Hot Reads

Thursday Hot Reads: Billionaires Don’t Use Index Funds

Plus, comments from Fed officials should serve as a flag for traders.

Index Investor Corner

Swedroe: Hedge Funds Eschew Low Vol Anomaly

An exploration of why hedge funds embrace high-volatility stocks despite the outperformance of low-volatility stocks. 

Index Investor Corner

Swedroe: Moral Hazard In Hedge Fund Fees

And why a fund with a systematic approach avoids this problem.