State Street Global Advisors has filed a 40-APP filing with the Securities and Exchange Commission asking for the necessary permissions to launch a hedge fund replication ETF.The filing?an initial step in the ETF registration process that takes place prior to the writing of a prospectus?does not mean the fund will launch anytime soon. It just means SSgA is laying the groundwork to consider such a product in the future.
The fund is described in the filing as the SPDR AlphaSimplex Absolute Beta ETF. It would track a rules-based index that invests in exchange-traded funds tied to equities, government bonds, short-term interest rates, currencies and commodities. The fund would aim to “approximate the common exposures of a broad universe of hedge funds in a relatively liquid, transparent and cost efficient manner.”
The fund would be somewhat similar, in that case, to the IQ Hedge Multi-Strategy Tracker ETF (NYSEArca: QAI) from IndexIQ. QAI also aims to deliver returns similar to a broad index of hedge fund strategies, although it uses an underlying portfolio of ETFs to achieve those returns. Currently, it has $68 million in assets.
If CalPERS is taking hedgies out, ETFs may be coming back in.
‘Smart beta’ almost surely means loss of more market share for active managers.
Be careful of your assumptions (and headlines!) about volatility ETFs.
WBIG hedges in some areas and bets big in others.