Hedging ETF Launches With Emerging Markets Focus
Source: http://www.indexuniverse.com/sections/newsinfocus/5963-hedging-etf-launches-with-emerging-markets-focus.html?Itemid=3&utm_source=straightstocks.com&utm_medium=sidebar&utm_campaign=rssPosted on Tuesday, June 9th, 2009 | In Exchange Traded Funds, Market Commentary
New hedging ETF to tackle emerging markets and global macro strategies.
The second exchange-traded fund aiming to deliver hedging strategies at bargain-basement prices is set to launch on Tuesday.
The IQ Hedge Macro Strategy Tracker ETF (NYSE Arca: MCRO) is expected to hit the market taking a more specialized approach. Its sister IQ Hedge Multi-Strategy Tracker ETF (NYSE Arca: QAI) set the table in March for using ETFs to mimic hedge funds. But it takes a broad approach across six different types of hedging strategies. (See related story here.)
The new ETF will focus on combining two hedging strategies—global macro and emerging markets. According to IndexIQ, which created MCRO’s underlying benchmarks and serves as its sponsor, the fund will start with about a 75% allocation to emerging markets and 25% to more diversified global markets.
Just as with QAI, the new fund will come with an expense ratio of 0.75%.
As with the original QAI, the index for MCRO will use ETFs rather than stocks or other securities as constituents. The reasoning is that such a methodology reduces portfolio costs and improves tracking efficiencies. It’s important to note that hedge funds focusing on global macro and emerging markets typically buy everything from stocks and bonds to commodities and currencies.
The top constituents in the Macro Tracker ETF’s index heading into May were:
|
Name |
Ticker |
Weight (%) |
|
iShares MSCI Emerg Mrkts |
EEM |
27.32 |
|
iShares 1-3 Yr Treasury Bond |
SHY |
18.09 |
|
iBoxx Invest Grd Corp. Bond |
LQD |
13.92 |
|
iShares Russell 2000 |
IWM |
6.05 |
|
PowerShrs DB Commodity |
DBC |
5.76 |
|
Vanguard Emerging Markets |
VWO |
5.19 |
|
iShares Short-Term Treasury |
SHV |
4.63 |
|
SPDR Int’l Treasury Bond |
BWX |
3.93 |
|
PwShrs DB G10 Currency |
DBV |
3.87 |
|
ProShs UltraShrt Real Estate |
SRS |
3.74 |
That left the composition at:
- International equities (32.51%)
- Short-Term Bonds (28.69%)
- Corporate Bonds (14.27%)
- U.S. Equity (6.05%)
- Commodity (5.76%)
- International Bonds (5.11%)
- Currency (3.87%)
- Inverse Real Estate (3.74%)
IndexIQ says that over time, the MCRO’s index has shown less volatility and stronger results than the MSCI Emerging Market Index, which is a long-only and fully invested stock-only traditional market-cap-sized index.
MCRO figures to be the next in a much bigger lineup planned by IndexIQ. In April, the firm filed to offer 15 more ETFs based on specific hedging strategies, including the Hedge Macro Strategy Tracker. (See related article here.)
Last 5 posts by IndexUniverse Staff
- Will UNL Beat UNG? - November 19th, 2009
- A Real Hedge Fund ETF? - November 17th, 2009
- ProShares’ Positive Tax Surprise? - November 17th, 2009
- Better Than Cash? - November 17th, 2009
- Stoxx Indexes Bought; Company Valued At $900M - November 13th, 2009
ETF, Exchange Traded Funds, G10;, iBoxx Invest Grd Corp;, index universe, IQ Hedge Macro Strategy Tracker ETF;, IQ Hedge Multi-Strategy Tracker ETF;, Market Commentary, MCRO;, MSCI Emerging Market, Russell 2000, Vanguard Emerging
 About IndexUniverse Staff (http://indexuniverse.com)
IndexUniverse encompasses the world of indexing and beyond. Our website and related subsites cover product and market developments related to index funds, exchange-traded funds (ETFs), index derivatives (futures / options / swaps), and the sophisticated investment strategies which use these financial tools. Our goal is to provide the industry's best news, columns, research, and features about the dynamic field of index-based investing and trading. Industry professionals, individual investors, business/finance students and academic researchers will find various features targeting their interests and needs. We also provide valuable tools and data to assess markets and investment products, and specialized discussion boards for our registered members to exchange cutting-edge ideas and market views. We aim to be educational, thought-provoking, and most importantly, rigorously independent in our perspective. The development of IndexUniverse was a global effort, originally led by Steven Schoenfeld and Jim Wiandt, supported by John Spence and a diverse team in the U.S., Europe and Latin America, and enhanced by editorial contributors from around the world. The site is now managed solely by Jim Wiandt and the global Index Publications LLC team. The site was originally started by Steven as a data and information complement to his book, Active Index Investing, published by Wiley Finance in July 2004. As he recognized the need and potential for such a resource, in August 2003, Steven partnered with Jim, who as editor of The Journal of Indexes similarly recognized the industry's need for timely, useful and independent information on products and markets. |
No recommendations, either expressed or implied, are being made to buy, sell, hold or short any of the mentioned stocks. No legal, tax or accounting advice is expressed or implied. Always contact your attorney, CPA, or tax advisor before acting on any legal or tax issues. StraightStocks.com is not responsible for the content, products, or services of any of the advertisers on this site. StraightStocks.com receives compensation from advertisers on this blog. Services and products referred to herein are trademarks, registered trademarks, servicemarks, and/or registered servicemarks of their respective trademark or servicemark owners.