Top ETF Buys for Hedge Funds, Family Offices in 1Q

Top ETF Buys for Hedge Funds, Family Offices in 1Q

These are the exchange-traded funds they added to during the quarter.

sumit
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Senior ETF Analyst
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Reviewed by: etf.com Staff
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Edited by: etf.com Staff

Regional banks and emerging markets were among the top investment ideas for hedge funds and family offices, respectively, last quarter. 

That’s according to analysis of 13F filings by Bloomberg, which found that the SPDR S&P Regional Banking ETF (KRE) experienced high demand from hedge funds in the first quarter of 2023. 

According to the analysis, “hedge funds added a net 13.47 million KRE ETF shares, increasing their combined holding to 17.97 million shares” and that “16 [hedge funds] cut or exited positions, while 50 added shares.” 
 
Regional banks were at the epicenter of a crisis that began in early March with the collapse of Silicon Valley Bank. The exchange-traded fund plummeted 28% in that month alone. 

Hedge funds seem to be betting that regulators have done enough to stabilize the industry, and that regionals can reverse some of that underperformance. 

KRE is the largest fund focused exclusively on regional banks, with $2.6 billion in assets under management. It’s had inflows of $1.6 billion this year. 

Emerging Markets  

Meanwhile, a separate Bloomberg analysis of investments made by family offices (private companies that manage investments on behalf of wealthy families) found that the iShares Core MSCI Emerging Markets ETF (IEMG) was the top buy among that group in 1Q. 

According to the analysis, “Family Offices bought 5.23 million iShares Core MSCI Emerging Markets ETF shares in the March 31 quarter as the fund rose 4.5%, the biggest position increase among their investments.” 
 
The ETF gained 3.7% in the first quarter, less than the 7.9% return for the S&P 500 in the same period. However, some investors believe the low valuations in emerging market stocks compared to U.S. stocks makes them attractive.  

IEMG is a giant in the emerging market space, with $69.4 billion in assets under management, just behind the Vanguard FTSE Emerging Markets ETF (VWO), which has $70.7 billion in AUM.  

IEMG has had inflows of $3.9 billion so far this year, while VWO has picked up $1.4 billion. 

 

Contact Sumit Roy at [email protected] 

Sumit Roy is the senior ETF analyst for etf.com, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining etf.com, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for etf.com, with a particular focus on stock and bond exchange-traded funds.

He is the host of etf.com’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays, etf.com’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.