New iBillionaire Index Live; ETF Planned

November 13, 2013

The proposed ‘iBillionaire’ index may lead to an ETF not unlike ‘GURU.’

A new index tracking the success of billionaire investors went live today, and a related “Billionaire ETF”—perhaps a bit like the Global X Guru ETF (GURU | C-48)—appears to be in the works as well.

iBillionaire Inc. today launched a new index designed for investors to track the investment portfolios of luminaries such as Warren Buffett, Carl Icahn and George Soros. The New York-based firm said in a press release it’s also designing an iBillionaire ETF to boost investors' portfolios “like a billionaire,” according to the firm.

The iBillionaire Index, like Global X’s $251 million ETF ‘GURU,’ is devised from 13F filings and is composed of the top 30 large-cap equities listed on the S&P 500 in which the billionaire investors have made the most bets. The index will be calculated and distributed by the New York Stock Exchange.

The firm, citing data from S&P Index Versus Active (SPIVA), said that less than 30 percent of actively managed funds have beaten the S&P 500 over the past three years. It also said “smart beta” strategies are a rising trend in the ETF space, as more and more investors shift away from capitalization-based indexes.

In fact, investors have poured $45.93 billion into smart-beta equity ETFs so far this year, in what amounts to a 20 percent increase in total assets in the segment, according to data compiled by IndexUniverse. The increase reflects just how strong an appetite there is for nonmarket-cap-weighted funds seeking excess returns in one form or another.

Like GURU, But Different

GURU has amassed, as noted, $251 million since launching in June 2012. Its performance is up 37.1 percent year-to-date. 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 the company’s proposed offering, which is slated for an early 2014 release, 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, Moreno said the ETF’s fees will be similar to GURU’s 0.75 percent expense ratio, or $75 for each $10,000 invested, and possibly even lower.


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