New index tracks Wall Street billionaires; ETF in pipeline

Nov 15th, 2013 | By | Category: Equities

iBillionaire, a New York-headquartered firm, has unveiled a new index which tracks the portfolios of some of Wall Street’s most famous investors, billionaires like Warren Buffett, Carl Icahn, George Soros, Daniel Loeb, David Tepper and David Einhorn.

New iBillionaire index tracks Wall Street’s biggest winners; ETF in pipeline

The new iBillionaire Index tracks Wall Street’s biggest winners.

Independently calculated and distributed by NYSE Euronext, the iBillionaire Index (BILLION) is composed of the top 30 large-cap US equities listed in the S&P 500 in which billionaire investors have allocated the most funds.

Devised from 13F filings, an SEC-mandated report which details the quarterly holdings of institutional investment managers, the index in effect uncovers which of the S&P 500 constituents leading billionaire investors believe to be the best bets.

The index thus provides investors with an efficient and effective way to follow the “smart” money on Wall Street. And smart seems to the right word. Based on backdated data, the index has outperformed the S&P 500 by nearly 90% over the past eight years.

According to iBillionaire, ten thousand dollars invested in the S&P 500 in 2005 would now be worth $14,018. Invested in the iBillionaire Index, it would be valued at $24,254, 1.7 times more. Over the past eight years, the iBillionaire Index would have resulted in an average 12.56% in annualized returns, as opposed to 7.06% with the S&P.

This performance, coupled will investors’ disillusionment with active strategies, could prove a winning combination with investors. And investors may soon get the opportunity to invest in the strategy directly as an exchange-trade fund (ETF) is understood to be in the pipeline.

As at 15 November, the top ten holdings were Wells Fargo, Apple, Yahoo, Coca Cola, IBM, General Motors, American Express, News Corp, Priceline and AIG. These top ten holdings equate to 56.25% of the iBillionaire Index compared to just 8.5% for the S&P 500.

The top three sectors were Technology, Financials and Consumer Staples. These sectors represent 65.0% of the index compared to 44.1% for the S&P 500.

The index (and thus any ETF subsequently linked to) bears a strong resemblance to the Top Guru Holdings Index, underlying index to the popular Global X Top Guru Holdings Index ETF (GURU). This index is based on similar principles and uses the same 13F data to provide exposure to an equally weighted portfolio of high-conviction stocks held by longer-term hedge fund investors.

Since its launch in June 2012, the fund has accumulated more than $250 million in assets. It is listed on the NYSE Arca and has Total Annual Fund Operating Expenses of 0.75%.

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