| NEW YORK
NEW YORK Oct 16 A one-year-old actively managed
exchange-traded stock fund has beaten a number of market
benchmarks in its first year, including most hedge funds, the
ETF sponsor AdvisorShares said on T u e sday.
Through September 30, the TrimTabs Float Shrink ETF
gained 35.14 percent since it launched on October 4 last year,
beating the benchmark Russell 3000 Index, which rose 32.85
percent over the same period, as well as the S&P 500 index.
The TrimTabs ETF also beat yearly gains for the benchmark
HFRI Fund Weighted Composite Index, which rose 4.7 percent
through September and tracks the performance of the $2 trillion
hedge fund industry.
The TrimTabs ETF portfolio is composed of the stocks of 100
companies that are actively buying back their own shares, and
which have positive and growing free cash flow.
ETFs are baskets of securities like mutual funds, but they
trade throughout the day like individual securities. Advocates
say they offer investors stock market exposure with better
liquidity terms and a cheaper price than other investment
vehicles, like hedge funds.
Criticisms that hedge funds are too pricey and illiquid have
gained traction this year as the industry, which lost money last
year, has gained only about 5 percent on average through
September. It trails the S&P 500 Stock Index, which rose 16.43
percent over the same period.
The hedge fund industry's underperformance over the past two
years raises questions about whether it makes sense for
institutional investors to pay hefty fees to hedge fund managers
when they can get the same, if not better, returns by buying
shares of low-cost index funds. Unlike most other portfolios,
hedge funds take a management fee, plus a performance fee that
is often 20 percent or more.
Some hedge fund strategies have performed better than
Emerging market-focused funds climbed almost 8 percent
through September. Some fixed income-focused
hedge funds, like those that specialize in securitized credit,
rose 12 percent for the year, while mortgage-backed securities
funds gained 10.67 percent.
Still, that performance trails the more than 35 percent
gains of the TrimTabs ETF.
At The Big Picture investment conference in New York
recently, financial research analyst Michael Belkin said hedge
fund returns could be replicated with portfolios composed of
investments in ETFs and treasury bills.
TTFS is managed by investment adviser TrimTabs Asset