One of the side benefits, at least for investors, of relatively new regulations imposed by the Securities and Exchange Commission (SEC) is that the holdings of hedge fund managers are made available to the public. Asset managers that exercise investment discretion over at least $100 million in assets must disclose their holdings to the SEC in the form of a quarterly 13F filing, which must be filed with the SEC within 45 days of the quarter’s conclusion. Global X Funds takes advantage of this regulatory feature by mining the 13F forms of a select group of large hedge fund managers, and then replicating their strategies in the form of an exchange-traded fund available to all investors: The Global X Guru Index ETF (GURU).
With roughly $490 million in assets, the Global X Guru Index ETF is celebrating its second anniversary in 2014, having launched on June 4, 2012. Since its inception, the ETF has generated returns of 87.17% through August 1; while the S&P 500 has generated returns of just 59.47%. The Global X Guru Index ETF also outperformed the S&P 500 in the second quarter of 2014, generating returns of 7.1%, compared to the S&P 500’s 5.2%. Shares of Global X Guru Index ETF trade on the NYSEArca.
“The first half of 2014 had been challenging for many hedge funds, however, their high conviction, low turnover stocks started to play out over the second quarter,” said CEO of Global X Funds Bruno del Ama, in a statement announcing the ETF’s anniversary. “GURU is able to smartly access ideas of some of the world’s most sophisticated money managers by isolating those picks.”
The success of GURU led Global X Funds to introduce two similar ETFs earlier this year: The Global X Guru Small Cap Index ETF (GURX) and the Global X Guru International Index ETF (GURI). Both funds utilize methodology that’s similar to the Global X Guru Index ETF, but with more focused exposure to small caps and international equities. GURX, the small cap fund, launched on March 11, 2014 and has returned -6.4% through August 1 as small cap stocks have slumped. GURI also launched on March 11, but it has returned a more impressive 5.9% through August 1.
The Global X Guru Index ETF’s largest single holding as of August 1 was Baidu.com (BIDU), which accounted for 2.31% of the fund’s assets. Other major holdings include Micron Technology, CP Railway, and CIT Group, as well as ADRs YPF Sociedad Anonima and America Movil-SRS providing more international exposure.
For more information, visit the GURU’s page at globalxfunds.com.