AlphaClone introduces index of international ‘best idea’ stocks

Nov 4th, 2015 | By | Category: ETF and Index News

AlphaClone, the investment advisor behind the AlphaClone Alternative Alpha ETF, has announced the launch of the AlphaClone International Downside Hedged Index, which applies their alpha-seeking investment strategy, culled from the investment ideas of established hedge funds, to equity markets outside the US.

AlphaClone introduce International Downside Hedged Index

The AlphaClone index aggregates best ideas from established fund managers and aims to hedge against protracted market downturns.

According to AlphaClone, the index seeks to give investors the potential to outperform broader international markets by accessing the investment ideas of the world’s most established hedge funds, while simultaneously hedging against protracted market downturns.

“Pursuing the potential for alpha is even more important today for long-term investors, given the anaemic growth forecasted for equities and bonds over the next several years,” says Maz Jadallah, CEO of AlphaClone. “We’re delighted to introduce an international version of our index, further expanding the number of alpha-seeking index strategies available to global investors.”

The index follows the same methodology used by AlphaClone’s AlphaClone Hedge Fund Downside Hedged Index, which has approximately $170m in assets currently tracking it, and has returned an average of 14.35% per year versus 12.40% for the S&P 500 Total Return Index over the three-year period ending 30 October 2015.

“Having seen success with our methodology inside separately managed accounts over the past five years, we’re excited to further expand access to our innovative investment methodology and are committed to helping long-term investors succeed,” Jadallah continued.

The index’s constituents are derived from holdings data from large institutional investors which are, by law, required to declare their holdings on a periodic and lagged basis. Using this portfolio data from established equity fund managers, AlphaClone use a proprietary scoring model to determine how effective particular investment managers have been in the past. The high conviction holdings of the highest scoring managers are then aggregated to create an index of at least 40 constituents. A dynamic hedge mechanism is also employed that allows the index to vary from long only to market hedged when the S&P 500 closes below its 200-day simple moving average at any month’s end.

AlphaClone have filed with the Securities and Exchange Commission to register an exchange-traded fund (ETF) that will track the AlphaClone International Downside Hedged Index and anticipate to launch it before the end of 2015.

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