New ETF Aims to Simplify Hedges

by Kyle Woodley | August 13, 2012 11:30 am

New ETF Aims to Simplify Hedges

If you’re an ETF fiend, and also easily bored, August hasn’t been your month.

Just one exchange-traded fund has been launched this past month. The lone newbie? The AdvisorShares QAM Equity Hedge (NYSE:QEH[1]), brought to life last week.

QEH is an actively managed fund that uses a long/short strategy and aims to exceed the risk-adjusted performance of approximately 50% of the long/short equity hedge fund universe as defined by the constituents of the HFRI Equity Hedge (Total) Index. The goal is to give investors a way to earn better risk-adjusted returns versus the S&P 500 Index over time without having to make individual hedge-fund investments themselves.

Kurt Voldeng, chief operating officer of CAM and co-portfolio manager of QEH, said in a press release: “We believe with our benchmark’s underlying constituents measuring approximately 1,000 hedge fund managers, places QEH at an advantage over our competition to generate alpha.” Voldeng also touted the liquidity and transparency (daily holdings will be available) of QEH — benefits not afforded by traditional hedge funds.

At launch, QEH had an enormous long weighting (35%) in the iShares Barclays Short Treasury Bond Fund (NYSE:SHV[2]) as well as a 10% weighting in the SPDR Barclays Capital 1-3 Month T-Bill ETF (NYSE:BIL[3]). Its top shorts were fractional weightings against the Currency Shares Japanese Yen Trust (NYSE:FXY[4]), Euro Stoxx Large Net Return Swap and iShares Russell 2000 Growth Index (NYSE:IWO[5]). QEH’s expenses are expectedly high, because it’s an actively managed fund, at 1.64%.

Though the launches have been light, at least some action is on the horizon. Also last week, iShares filed with the SEC a proposed list of currency ETFs[6]. The currencies involved would include the Australian dollar, British pound, Canadian dollar, Chinese renminbi, euro, Japanese yen, Mexican peso, New Zealand dollar, Norwegian krone, Singapore dollar, Swedish krona, Swiss franc, Thai baht and Turkish lira.

In all, 135 new funds have come out so far in 2012, according to XTF.com[7].

Kyle Woodley[8] is the assistant editor of InvestorPlace.com[9]. As of this writing, he did not hold a position in any of the aforementioned securities. Follow him on Twitter at @KyleWoodley[10].

Endnotes:
  1. QEH: http://studio-5.financialcontent.com/investplace/quote?Symbol=QEH
  2. SHV: http://studio-5.financialcontent.com/investplace/quote?Symbol=SHV
  3. BIL: http://studio-5.financialcontent.com/investplace/quote?Symbol=BIL
  4. FXY: http://studio-5.financialcontent.com/investplace/quote?Symbol=FXY
  5. IWO: http://studio-5.financialcontent.com/investplace/quote?Symbol=IWO
  6. a proposed list of currency ETFs: http://www.sec.gov/Archives/edgar/data/1100663/000119312512344471/d386729d485apos.htm
  7. XTF.com: http://www.xtf.com/
  8. Kyle Woodley: http://investorplace.com/author/kyle-woodley/
  9. InvestorPlace.com: http://investorplace.com/
  10. @KyleWoodley: https://twitter.com/#%21/kylewoodley

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