ETF Investing, With a Twist
By John Jannarone, 11/23/09
For years, hedge funds plied strategies out of most investors’ reach. As the exchange-traded fund bandwagon rolls on, however, financiers are following the trend to try to mimic more of those strategies. For one manager, literally.
ETF Portfolio Management is using ETFs to create a twist on a hedge-fund strategy called “trend following,” which bets on sustained price movements to make returns with low correlation to the broad market. Trend-following funds are part of a group managing $92 billion that returned 18% last year when broader markets plunged, according to Hedge Fund Research. ETF Portfolio Management’s funds and the broad group of trend-following hedge funds have slightly negative returns in 2009.
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