Most Popular ETFs Hedge Funds Are Crazy About

Page 1 of 2

What are the most popular ETFs? Exchange-traded funds provide liquid ways for investors, including billionaire hedge fund managers, to take large positions in macro and other investment themes. Along with general equities, hedge funds and other major investors are required to disclose their holdings of many ETFs in quarterly 13F filings. We track 13Fs as part of our work developing investment strategies; for example, we have found that the most popular small cap stocks among hedge funds generate an average excess return of 18 percentage points per year and our portfolio based on this strategy outperformed the market by 33 percentage points in the last 11 months. Learn more about our small cap strategy. Our database can also be used to see which ETFs are the most widely owned among these hedge funds and other notable investors. Excluding general U.S. index funds such as the S&P 500 and Russell 2000 ETFs, here are the five most popular exchange-traded funds among the filers we track:

57 funds in our database reported a long position in the SPDR Gold Trust (ETF) (NYSEARCA:GLD), one of the most liquid gold ETFs. For some time many fund managers- as well as many finance bloggers- have been convinced that the Federal Reserve’s expansionary monetary policy would prove extremely bullish for gold. While the SPDR Gold Trust (ETF) (NYSEARCA:GLD) is still up strongly from its levels five years ago, it has fallen more than 15% year to date. Gold has been a major money loser for billionaire John Paulson’s Paulson & Co., which still had over $1.2 billion invested in the ETF at the end of June (find Paulson’s favorite stocks).

best gold ETF

After a big gap, the next most popular ETF on our list is the iShares MSCI Emerging Markets Indx (ETF) (NYSEARCA:EEM). Emerging markets tend to offer higher returns but a higher risk than U.S. equities, and also serve as a way for fund managers to diversify their portfolio away from exposure to the U.S. economy in normal times. Year to date, the ETF has fallen 13% against a rising market due to a number of factors including the possibility that the Fed will tighten up its monetary policy and therefore cut off much of the liquidity which has benefitted emerging markets indices.

Page 1 of 2