There are now over 6,000 ETFs on 60 exchanges and ETFs exist for everything from corporate bonds to gold bars to oil futures. Like the USB port or a gas pump, ETFs have basically standardized the entire universe of investing so that everything under the sun now trades like shares of Apple. But what, exactly is an ETF and why have they become so popular? Bloomberg explains in this short video.
Think you know why inflation isn’t higher? We bet you’re wrong. Here’s the truth on why inflation isn’t higher, and how the Fed uses inflation targeting, with real examples and dates to show you how the Fed has managed to keep inflation down despite increasing the money supply through Quantitative Easing (QE).
A look at the record equity outflows and bond inflows and what it means for the stock market, a recap of the mysterious deaths of finance workers last week, and a the outlook for gold and gold stocks in 2014.
A look at the capital control central banks around the world are imposing on its citizens, the mysterious deaths of finance workers this week and how it relates to the market, and hand how to gauge gold prices.
The details on the Bitcoin ETF to be offered by Tyler and Cameron Winklevoss to track the performance of the average price of Bitcoins
A look at how China’s problems, both fudged numbers and liquidity crunch, affects Canada, and the looming financial disaster that’s bigger than subprime.
In this letter, Ivan Lo reveals the Shocking Truths About High Frequency Trading, how it affects our markets, how and why it works, and the dangers involved
In this week’s Letter, Ivan Lo talks about the world’s four biggest developed-market monetary authorities collaborating on the world’s biggest monetary injection, how to play Japan, America’s declining labour participation force, how gold is slipping through Italy’s borders, and what’s happening in North Korea.
It’s funny how the stock market works. It seems every week we have the fight of intraday bulls against the weekend selloff bears.
While scratched and bruised, neither of the beasts are winning.
As bright as the markets may look at times, there’s still a lot of economic issues that have yet to be fixed. From foreclosure troubles to unemployment, the markets remain shaky for all of the right reasons.
But have no fear…
As our economy wrestles to get back on its feet and rebuild a foundation of trust and loyalty in consumer confidence, the financial markets are once again seizing the opportunity to profit. Amidst the gloom and uncertainty of individual stocks bloom dozens of ETF’s ranging from resources to junk bonds to the newly created hedge fund ETF.
Word around town is that Direxion Funds, with their triple-leveraged and inverse exchange traded funds, just filed to launch 40 new funds with the SEC. But today I want to bring up a new ETF
which I found to be surprisingly interesting giving the recent Madoff Scandals and hedge fund failures.
Welcome to the world of the new IndexIQ’s Hedge Fund ETF called IQ Hedge Multi-Strategy Tracker ETF trading under the symbol QAI on the NYSE Arca. The fund attempts to reap the performance of hedge fund strategies and reap hedge fund-like returns but trades as an ETF, allowing investors who don’t understand the concepts of their strategies to make their bets. And with $5.5 billion in hedge fund outflows for the month of February (according to one of featured media users Charles Biderman of Trimtabs) can QAI make it?
Before the market collapse, only the richest and the well-connected had access to hedge funds. But now QAI is attempting to allow access to regular investors with minimal investment to become part of the elite. But let’s not jump the gun.
QAI doesn’t actually invest in hedge funds; rather, they analyze publicly available hedge-fund performance data and use this to match returns using ETFs and other liquid trading vehicles by creating an ETF-based index. The multiple strategies employed include long/short equity, global macro, market neutral, event-driven, fixed income arbitrage, and emerging markets.
This ETF-based investment approach allows QAI to provide intra-day liquidity, portfolio transparency, lower fees than the typical hedge fund, and the elimination of manager-specific risk. Or so they say.
Although the stated intent of QAI is to mirror the performance and strategies of hedge funds, there are obvious strategies used by hedge funds that simply cannot be duplicated with ETF’s. Things like merger arbitrage strategies which require taking positions in individual securities and convertible arbitrage can’t be duplicated using ETF’s. Nor can the flexibility of reconstitution and re-balancing be achieved.
But all that won’t stop me from following this newly formed hedge fund ETF. Because if I can get away with hedge fund returns without paying thousands of dollars to buy a hedge fund manager’s next Ferrari, I’d gladly give it a shot.
Take a look at their IQ Alpha Hedge Strategy Fund, a mutual fund that was down just 4.1% for the year, compared to an 18.2% loss in the S&P 500. The IndexIQ fund itself is down only about 12% since July 2008 compared to the S&P 500, which is down 38%. Not bad for an ETF created index.
With hedge fund managers requiring annual expenses of 2%, and many with a 20% performance fee charge, QAI could easily spring out from this crisis as the new hedge fund for dummies. But first I’d like to see how they fare in this market. But I can tell you that I will be watching these guys very closely. Very.