Hedge Fund Tracking ETFs Lagging S&P

July 08, 2014

3. $785 million IQ Hedge Multi-Strategy Tracker ETF (QAI | B-73) YTD Return: 3.9 percent

QAI adheres closest to how Alfred Winslow Jones, the creator of the first hedge fund, originally conceived of a hedge fund: a portfolio that buys stocks with leverage (or margin), and sells other stocks short to create a conservative portfolio that’s less susceptible to wild swings in the market.

The fund tries to replicate the return characteristics of hedge funds using various investment styles, including long/short equity. Right now, it’s holding ETFs such as the Vanguard Total Bond Market ETF (BND | A-94) on the long side, while shorting other ETFs, such as the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD | A-75).

Since QAI is a multistrategy, multi-asset-class hedge fund replicator, it’s more likely to deliver lower volatility with lower correlations to major asset classes, according to Britt. The fund is up 3.9 percent year-to-date and costs 0.94 percent, or $94 for every $10,000 invested.


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