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August 08, 2012 at 10:54 AM
In a bid to attract retail investors who want access to the institutional hedge fund universe, AdvisorShares announced that the QAM Equity Hedge ETF (QEH) opened for trading Wednesday on the New York Stock Exchange.
The exchange-traded fund, which is subadvised by Memphis-based Commerce Asset Management (CAM), employs an actively managed long/short strategy that uses the HFRI Equity Hedge (Total) Index as its benchmark. The net expense ratio for QEH is 1.64%.
With the markets remaining virtually unchanged on the fund’s first day, the price of QEH remained unchanged, opening and then also closing at $25 per share. However, the NAV, which shows the actual value of QEH’s underlying holdings, closed at $24.99. Opening NAV was at $24.90.
Bethesda, Md.-based AdvisorShares, which offers 15 other actively managed ETFs totaling about $670 million, reports QEH’s top long holding, at a weight of 35%, as the iShares Barclays Short TR (SHV). Cash is weighted at 3.30% and the fund’s largest short holding, at -0.88%, is CurrencyShares Japanese Y (FXY).
“We clearly define our benchmark upfront,” said CAM Chief Operating Officer and QEH Co-Portfolio Manager Kurt Voldeng, in an interview in New York on the day of the launch. “Over time, a buy-and-hold investor should be able to achieve equity-like returns on the strategy with less volatility than the S&P 500.”
Before the ETF’s launch, advisors told Voldeng that they were looking for alternative investments that offer a lower barrier to entry. The advantage of QEH, he said, is its ETF structure that offers liquidity, transparency and tax advantages along with its lower cost.
“We’ve got a low minimum to get in. It’s $25 [per share], not $1 million,” he said, adding that the HFRI index has outperformed the market for the last 12 of 22 years versus only 10 of 22 years for the S&P 500 Index.
