Hedge funds are reserved for ultra-rich investors and institutions, but a new exchange traded fund brings their sophisticated strategies to average people.

The IQ Hedge Multi-Strategy Tracker ETF ( QAI) started trading last week. It replicates the tactics hedge funds are famous for, such as short selling and arbitrage, by investing in other ETFs.

Hedge funds are known to generate returns even if the stock market drops, but that performance usually comes at a high cost. The IQ Hedge fund takes 0.75% for fees and costs, topping the expense ratios of more common funds like PowerShares QQQ ( QQQQ) and the SPDR S&P 500 ETF ( SPY), which charge 0.2% and 0.1%, respectively. But if the fund delivers better risk-adjusted returns than a stock ETF, it might be worth the higher cost.

The IQ Hedge fund relies on a complex scoring system to guide its asset allocation, which can change as often as monthly. Most of the ETF's assets are invested in funds that track broad, common indexes, such as the Morgan Stanley Capital International EAFE Index. The fund creates short positions by buying "inverse" funds, like the ProShares UltraShort Russell 2000 ( TWM), which bet on falling markets.

It's difficult to figure out the strategy the IQ Hedge fund is going after with each underlying ETF. For example, it has a small amount invested in the ProShares UltraShort Euro fund ( EUO). Is this move related to global events or something else?

Bond ETFs, which have been the best place to be, account for the largest portion of assets. A quarter of the fund is invested in the iShares Barclays Aggregate Bond Fund ( AGG), its largest holding. The No. 2 holding is the iShares Barclays 1-3 Year Treasury Fund ( SHY) with 18% of assets.

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