Hedge Fund ETF and Obama Goes Viral

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.

Click to PlayWelcome 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.

Obama Goes Viral – You Should Too

President Obama invited everyone to use a new feature on WhiteHouse.gov called “Open for Questions” to ask a question about the economy and rate other questions up or down this past Tuesday. Then, on Thursday morning, Obama conducted a special online town hall on the economy and answer some of the most popular questions and streamed the event on WhiteHouse.gov.

“Open for Questions” is a new experiment for WhiteHouse.gov, the President’s latest effort to open up the White House and give Americans from around the country a direct line to the Administration. This experiment is about encouraging transparency and accountability from the government.

The trial run of Open for Questions has wrapped up with the President answering several of the most popular questions during a special online town hall.

To me, its amazing why more corporations are not following in the footsteps of President Obama. His actions through online video have obviously sent his popularity through the roof and may have played been a big part in his Presidential victory.

Corporations should not only begin to use online video to further enhance their communications with shareholders but also use it as a marketing tool to attract new ones.

So begin experiencing better investor sentiment, better investor communications, and better market awareness by allowing your company to access to the most effective and most efficient means of corporate exposure and marketing by giving investors what they want: YOU

Find out how our Digital Strategies can separate your company from the others. Its gives your senior executives an unparalleled opportunity to tell your story directly to your investor audiences. It is easily the most requested form of communications from investors.

For the first time ever, the President of the United States, Barrack Obama, has embraced the use of online video for his communications.

You should to.