Following Hedge Honchos

Another newly launched fund, the AlphaClone Alternative Alpha ETF (ALFA), also tracks hedge fund strategies.

ALFA is linked to the AlphaClone Hedge Fund Long/Short Index, which benchmarks the performance of US-traded equity securities to which hedge funds and institutional investors have disclosed significant exposure.

Among the fund's goals is to capture alpha from these managers' long positions while protecting against protracted market downturns through a dynamic hedge mechanism. The indexing methodology developed by AlphaClone ranks hedge funds and institutional investors based on the efficacy of replicating their publicity disclosed positions. Equities are selected from those managers with the highest ranking, or "Clone Score."

The index also incorporates a rules-based hedging strategy that adjusts holdings between being long only and market hedged based on certain technical price targets for a broad index of U.S. equities. ALFA's underlying index is reconstituted quarterly and can vary between being long only and market neutral (up to 50% short exposure using inverse unleveraged exchange-traded funds).