Hedge Fund Strategies Are Getting ETF-ed: Are Lower Fees Inevitable?
Portfolio Pulse from Surbhi Jain
Hedge fund strategies are being replicated in ETFs, offering lower fees and attracting institutional investors. Simplify's EQLS and MTBA, iMGP's DBMF, First Trust's FMF, Simplify's CTA, KFA's KMLM, and WisdomTree's WTMF are examples of such ETFs. EQLS received $104 million from GE's pension fund, while Michigan's pension fund invested $364 million in another Simplify ETF. These ETFs charge less than 1% in fees, compared to the typical 2% management and 20% performance fees of hedge funds, suggesting a potential for even lower fees in the future.
November 10, 2023 | 8:29 pm
News sentiment analysis
Sort by:
Ascending
POSITIVE IMPACT
Simplify's CTA ETF, with its managed futures strategy and competitive expense ratio, is part of the broader move towards lower-fee alternative investment ETFs.
CTA's positioning as a lower-fee alternative investment ETF could benefit from the current trend of institutional investments moving away from high-fee hedge funds, suggesting potential for asset growth.
CONFIDENCE 75
IMPORTANCE 70
RELEVANCE 70
POSITIVE IMPACT
iMGP's DBMF ETF has seen substantial growth in assets, indicating strong investor interest in managed futures hedge fund strategies at lower fees.
DBMF's rapid growth in assets under management reflects a significant shift in investor preference towards ETFs that offer hedge fund-like strategies with lower fees, which could continue to drive its price up in the short term.
CONFIDENCE 90
IMPORTANCE 85
RELEVANCE 85
POSITIVE IMPACT
Simplify's EQLS received a significant investment from General Electric's pension fund, indicating institutional confidence and potential for growth.
The investment from a large pension fund like GE's is a strong vote of confidence in EQLS, likely leading to increased investor interest and potentially higher demand for the ETF in the short term.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90
POSITIVE IMPACT
First Trust's FMF ETF is part of a trend where managed futures strategy ETFs are gaining traction with institutional investors.
FMF's inclusion in the discussion of hedge fund strategy ETFs attracting institutional money suggests a positive outlook for its growth, as lower fees may continue to draw investor interest.
CONFIDENCE 75
IMPORTANCE 70
RELEVANCE 70
POSITIVE IMPACT
KFA's KMLM ETF has quickly accumulated $295 million in AUM, indicating strong market acceptance of its managed futures index strategy.
KMLM's quick accumulation of assets underlines the market's positive reception to ETFs that offer hedge fund strategies with more affordable fees, which could lead to further AUM growth.
CONFIDENCE 80
IMPORTANCE 75
RELEVANCE 75
POSITIVE IMPACT
Simplify's newly launched MTBA ETF, focusing on mortgage-backed securities, could attract investors seeking alternatives to U.S. Treasuries with low credit risk.
The launch of MTBA and its focus on mortgage-backed securities with attractive yields could draw investors looking for alternatives to traditional bonds, potentially increasing the ETF's assets under management.
CONFIDENCE 80
IMPORTANCE 75
RELEVANCE 80
POSITIVE IMPACT
WisdomTree's WTMF ETF, with its lower expense ratio, is part of the growing preference for ETFs that replicate hedge fund strategies.
WTMF's lower expense ratio and its role in offering a hedge fund strategy could make it an attractive option for investors, potentially leading to an increase in its assets under management.
CONFIDENCE 75
IMPORTANCE 70
RELEVANCE 70