Every quarter, all funds with over $100 million in assets are required to file a form 13-F with the Securities and Exchange Commission. This form is publicly discloses the holdings of these funds. GURU then uses proprietary methodology to determine the highest conviction ideas among this list for the underlying assets of the ETF.
Risks to Consider:
Despite all their advantages, hedge funds can and do lose money. Consider Long Term Capital Management and other high-profile fund blow-ups. As you know, just because professionals are invested in the same stocks does not guarantee performance by any stretch. In addition, GURU is a brand new ETF with no historical track record.
Action to Take
I'm bullish on the future of hedge funds, therefore very excited about this new ETF that opens up the world of equity hedge funds to everyday investors. It's about time that the hedge fund world starts to become democratized. This ETF and another recently launched one,
AlphaClone Alternative Alpha ETF
, are the first steps in this process. If you are bullish on hedge funds as well as stocks in general, taking a long position in hedge fund-replicating ETFs makes sense.