Beyond iBillionaire ETF’s Marketing Sizzle

October 01, 2014

IBLN's Large Cap Tilt

The iBillionaire Index tilts far larger than the other two, with a more concentrated allocation. Another difference of note is that ALFA's index, the AlphaClone Hedge Fund Long/Short Index at times will include short positions, while the other two indexes limit themselves to long only.

iBillionaire's composition comes with concerns as well. As Dave Nadig,'s chief investment officer, explained in a recent blog, potential investors should be wary of iBillionaire in a down market.

Investing like a billionaire implies that you'll turn your money into even more money, so ultimately, ILBN must have good returns.

Better Returns—For Now

Although it was only created 11 months ago, the iBillionaire Index has returned over 14 percent in that time, compared to the S&P 500 pulling in roughly 13.5 percent. In that same time frame, the indexes around which ALFA and GURU are built have returned 13 percent and 9 percent, respectively.

The new ETF tends to hold larger companies, which might explain why its returns so far are better than those of its two competitors.

Still, IBLN has an annual expense ratio of 65 basis points, or $65 for each $10,000 invested, which is less than either ALFA's 95 basis points and GURU's 75. Those differences can add up over time. It should be noted that funds following the S&P 500 usually cost much less than any of these (although none of them come with apps).

Still, the iBillionaire Index is less than a year old, so view any performance cautiously.

The future is always hazy, but, as it stands, iBillionaire comes with a loud, clear pitch that is sure to turn heads far enough to give it an honest shot to take off. Keep an eye on it.

At the time this article was written, the author held no positions in the securities mentioned. Contact Chris Vinyard at [email protected].


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