Daily ETF Watch: iBillionaire Fund Launches

August 01, 2014

iBillionaire, the firm that created a hedge-fund replication index by the same name, today is involved in the launch of the Direxion iBillionaire Index ETF (IBLN) that is similar to the Global X Guru ETF (GURU | B-56), but cheaper.

Also, Compass EMP, a recent newcomer to the ETF space, today is launching a “smart beta” fund that targets small-cap stocks that have low-volatility profiles. The fund, the company’s fourth, is based on an index the Brentwood, Tenn.-based firm created itself. It’s the fund sponsor’s fourth ETF.

Friday’s launches will bring the year-to-date ETF rollout total to 116 new products compared with 79 new funds for the same period last year. The two new funds bring the total number of funds to 1,620 ETFs managing $1.874 trillion in assets.

iBillionaire ETF Launch

The iBillionaire security offers the prospect of outperforming the S&P 500 Index at a time when the stock benchmark is reaching new highs after surging 32 percent last year. Year-to-date, the S&P is up more than 5 percent, as investors continue to feed off of the Federal Reserve’s dovish stance on short-term interest rates.

IBLN will track the iBillionaire Index comprising 30 U.S. large- and midcap securities favored by the likes of Warren Buffett, Carl Icahn and George Soros, as stated in 13F filings.

Global X’s GURU has $500 million in assets and gathered $363.6 million last year, according to ETF.com data. The fund returned 47.3 percent in 2013. The ETF tracks an equal-weighted index that attempts to mimic concentrated equity positions taken by large hedge funds, as reported in 13F filings.

Raul Moreno, co-founder of iBillionaire, said in a previous interview with ETF.com that his company’s proposed offering is looking to have exposure to a finite number of hedge fund managers (10) with large-cap holdings, whereas GURU tracks about 75 hedge funds with small- and midcap holdings.

“It’s a finer slice of GURU because we don’t want to be labeled as an alternative investment fund,” said Moreno. “We’re really competing against the S&P 500.”

Also unlike GURU, the Direxion iBillionaire Index ETF will have an expense ratio of 0.65 percent, or $65 for every $10,000 invested, versus 0.75 percent, for GURU.

The fund’s launch was made public via an NYSE Arca electronic communique.


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