The newly-launched AlphaClone Alternative Alpha ETF ALFA has become the first exchange-traded fund (ETF) to invest in disclosed equity positions held by established hedge fund managers.
The new ETF seeks to capture alpha from these managers’ long positions while protecting against protracted market downturns through a dynamic hedge mechanism.
The ETF structure enables ALFA to provide investors access to the alpha-generating potential of established hedge fund managers within a transparent vehicle that is available for trade daily on the NYSE.
ALFA, derived from the innovative research and hedge fund replication methodology developed by AlphaClone, LLC, and its founder Mazin Jadallah, is based on the passive, risk-managed AlphaClone Hedge Fund Long/Short Index.
"AlphaClone offers our separate account clients strategies that expertly combine long hedge fund equity positions with disciplined downside protection," says Jadallah. "With the introduction of ALFA, investors around the world can now access our proven investment approach in a transparent and easy to access vehicle that can help navigate today’s challenging market environment."
Different from hedge fund beta factor replication, the AlphaClone index directly selects its long positions from public disclosures using AlphaClone’s proven Clone Score ranking. This proprietary methodology measures the efficacy of following managers based on their disclosures over a complete market cycle (since 2000). The index also incorporates a rules-based hedge mechanism that adjusts holdings between being long only and market hedged based on certain technical price targets for a broad index of US equities.
ALFA is the first ETF to result from AlphaClone’s partnership with the International Securities Exchange, a leading US options exchange. AlphaClone and ISE recently partnered to promote AlphaClone’s index research and investment strategies.
Exchange Traded Concepts, LLC, serves as investment adviser to ALFA. Knight Clearing Services LLC is the Lead Market Maker.