{"id":2691,"date":"2021-04-20T18:18:16","date_gmt":"2021-04-20T18:18:16","guid":{"rendered":"http:\/\/blog.valuengine.com\/?p=2691"},"modified":"2021-04-20T18:36:50","modified_gmt":"2021-04-20T18:36:50","slug":"evaluating-a-hot-hedge-fund-strategy-etf","status":"publish","type":"post","link":"http:\/\/blog.valuengine.com\/index.php\/evaluating-a-hot-hedge-fund-strategy-etf\/","title":{"rendered":"Evaluating a Hot Hedge Fund Strategy ETF"},"content":{"rendered":"

Lately, ValuEngine<\/a> has seen ticker GVIP (Goldman Sachs Hedge Industry VIP ETF)<\/strong> on several ETF strategists\u2019 buy lists.\u00a0 The fund\u2019s strategy is intended to take advantage of the highest conviction holdings of \u201cVIP Hedge Fund Managers.\u201d Specifically, GVIP seeks to track the GS Hedge Fund VIP Index, which is constructed in accordance with a rules-based methodology derived from concepts previously developed by Goldman Sachs\u2019 Global Investment Research division. The Index consists of fundamentally driven hedge fund managers\u2019 \u201cVery-Important-Positions,\u201d which appear most frequently among their top 10 long equity holdings. Indeed, many hedge funds use strategies that go long \u201csmart money\u201d holding. By \u201csmart money\u201d, they generally refer to the most profitable hedge funds.\u00a0\u00a0<\/span><\/p>\n

All of the approximately 5,000 stocks, 16 sector groups, 140 industries, and 500 ETFs have been updated on www.ValuEngine.com<\/a><\/h6>\n
Free Two Week Trial to all 5,000 plus equities covered by ValuEngine\u00a0HERE<\/a><\/h6>\n

A brief summary of GVIP\u2019s methodology: Hedge funds included in the index must hold over $100 million in US-listed stocks and be identified by Goldman Sachs\u2019 research team as top \u201cfundamentally-driven\u201d performers. \u00a0 The next step is to identify the 50 US-listed stocks that appear most frequently in the top 10 reported holdings of the hedge fund manager universe as reported in the most recent government-required 13-F filings.\u00a0 <\/span>The stocks are equally weighted in the index which is reconstituted and rebalanced quarterly.\u00a0<\/span><\/p>\n

Juan de la Hoz of the Stamford Chemist CEF\/ETF Income Laboratory reports that GVIP has consistently outperformed the S&P 500 Index since inception with the greatest out-performance coming in the last 9 months of 2020.\u00a0 Data from the ETF Fact Sheets reflect similarly robust performance. This chart compares GVIP to IVV, the iShares S&P 500 Core Index Fund.\u00a0\u00a0\u00a0<\/span><\/p>\n\n\n\n\n\n
ETF<\/b><\/td>\nExpense Ratio\u00a0<\/span><\/td>\n1-Year Ann. Tot. Return\u00a0<\/span><\/p>\n

as of December 31, 2020<\/span><\/td>\n

3-Year Ann. Total Return<\/span><\/p>\n

as of December 31, 2020<\/span><\/td>\n<\/tr>\n

GV<\/b>IP<\/b><\/td>\n0.45%<\/span><\/td>\n44.00%<\/span><\/td>\n20.07%<\/span><\/td>\n<\/tr>\n
IVV<\/b><\/td>\n0.03%<\/span><\/td>\n18.35%\u00a0<\/span><\/td>\n14.14%<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Moreover, in stark contrast to some of 2020\u2019s top-performing ETFs that stumbled badly as the market rotated from growth to value, GVIP is off to a good start in 2021.\u00a0 During the past 3 months, it added to its advantage since inception over IVV posting a return of 6.41% in comparison to 4.88%.\u00a0\u00a0<\/span><\/p>\n

Of course, past performance does not guarantee future results.\u00a0 With that in mind, let\u2019s take a look at the ValuEngine report on GVIP.\u00a0 It is among just a handful of ETFs rated by ValuEngine with 5 Vs in contrast to 3 Vs for IVV.\u00a0 Going inside GVIP, the top 10 holdings are:<\/span><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Ticker\u00a0 Company\u00a0 \u00a0 \u00a0 Percent of Portfolio \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 VE Rating\u00a0 \u00a0 Industry Sector<\/b><\/td>\n<\/tr>\n
EXP \u00a0 EXPEDIA INC\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 2.40\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 3 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 Retail-Wholesale<\/span><\/td>\n<\/tr>\n
BAC \u00a0 BANK OF AMER CP\u00a0 \u00a0 2.36\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 2\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 Finance<\/span><\/td>\n<\/tr>\n
WFC \u00a0 WELLS FARGO\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 2.34\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 3\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 Finance<\/span><\/td>\n<\/tr>\n
FB\u00a0 \u00a0 \u00a0 FACEBOOK INC-A\u00a0 \u00a0 \u00a0 2.33\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 3\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 Computer and Tech<\/span><\/td>\n<\/tr>\n
FISV \u00a0 FISERV INC\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 2.29\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 3 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 Business Services<\/span><\/td>\n<\/tr>\n
FIS \u00a0 \u00a0 FIDELITY NAT IN\u00a0 \u00a0 \u00a0 \u00a0 2.28\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 3 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 Business Services<\/span><\/td>\n<\/tr>\n
BKNG BOOKING HLDGS. \u00a0 \u00a0 2.26\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 3 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 Retail-Wholesale<\/span><\/td>\n<\/tr>\n
MA \u00a0 \u00a0 MASTERCARD INC \u00a0 \u00a0 2.25\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 3 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 Business Services<\/span><\/td>\n<\/tr>\n
MU \u00a0 \u00a0 MICRON TECH\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 2.21\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 3 \u00a0 \u00a0 \u00a0 \u00a0 Computer and Tech<\/span><\/td>\n<\/tr>\n
TDG TRANSDIGM GROUP \u00a0 2.19 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 3 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 Aerospace<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The slight differences in percentages of the portfolio for these two stocks are interesting. Given that they were set at 2.0% for each of the 50 stocks at the last reconstitution\/rebalancing date, the differences reflect the relative performance of each stock compared with the portfolio in the past 5 weeks.\u00a0 The two finance stocks, BAC and WFC, along with the three finance-related business services stocks are demonstrative of why GVIP continued to perform well.\u00a0 The fact that these 5 selections were consistently among the top 10 holdings of the VIP Fund Manager set reflects the fund\u2019s thesis relying upon the wisdom of the consensus of experts.\u00a0 Comparing the sector weightings on page 3 of the ValuEngine reports confirms that the consensus of experts was ahead of the shift.\u00a0 The Business Services sector weight for GVIP now stands at 10.9%, more than double the 5.1% of IVV.\u00a0 I also note that the weight of Consumer Staples stands at 0% in comparison to the 5% held by IVV, indicating that the hedge fund managers see the upcoming period as one of economic expansion and a risk-on environment.<\/span><\/p>\n

Advisory Services based on ValuEngine research available:<\/h5>\n
www.ValuEngineCapital.com<\/a><\/h5>\n

As promising as any prospective holding may look, a savvy investor always looks at what could go wrong.\u00a0 In his article, De la Hoz pointed out that the methodology of using 13-F filings is a bit backwards-looking as these documents can be filed as many as 45 days after the previous calendar quarter has ended.\u00a0 Technological advancements in the hedge fund strategies could exacerbate this weakness.\u00a0 For example, the Depository Trust Clearing Corporation (DTCC) now offers a data product called Investor Kinetics that provides information on what the largest hedge funds are buying and selling during the quarter with only a three-day lag, not a 45-day lag.\u00a0 These data change daily, not quarterly.\u00a0 This allows short-term traders using such a strategy to be more adroit than an index-based ETF which is unlikely to be able to reconstitute so frequently.\u00a0 That lag could potentially ease into the strategic advantage GVIP has enjoyed so far.\u00a0 However, at this point, my warning is simple speculation and GVIP\u2019s resilience during the recent market rotation is reason enough to stay with it for the time being.<\/span><\/p>\n

Subscribers access to the ValuEngine report on GVIP<\/strong>: HERE<\/a><\/h5>\n
OR sign up for trial subscription to access report HERE<\/a><\/h5>\n

My conclusion is that GVIP, classified by Morningstar as Large Cap Blend, is a worthy core holding.\u00a0 As a quant, I am uncomfortable with a 50-stock portfolio being one\u2019s only core holding.\u00a0 Therefore, you might consider replacing 25% of a more diversified ETF such as VTI or IVV with GVIP but only if you are inclined to take on a bit more price volatility in exchange for an ETF with a track record of superior returns.\u00a0\u00a0<\/span><\/p>\n

By Herb Blank<\/p>\n

All of the approximately 5,000 stocks, 16 sector groups, and 140 industries have been updated on\u00a0www.ValuEngine.com<\/a><\/p>\n

New: Over 500 ETF reports updated weekly.<\/p>\n

Financial Advisory Services based on ValuEngine research available through\u00a0ValuEngine Capital Management, LLC<\/a><\/p>\n

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_____________________________________________________________________________________________<\/p>\n

support@ValuEngine.com | ValuEngine, Inc | (321) 325-0519<\/p>\n

\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Lately, ValuEngine has seen ticker GVIP (Goldman Sachs Hedge Industry VIP ETF) on several ETF strategists\u2019 buy lists.\u00a0 The fund\u2019s strategy is intended to take advantage of the highest conviction holdings of \u201cVIP Hedge Fund Managers.\u201d Specifically, GVIP seeks to track the GS Hedge Fund VIP Index, which is constructed in accordance with a rules-based … Read more<\/a><\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[4,130,39],"tags":[1704,1796,1760,1790,1719,1791,1794,1789,1788,1731,1793,1792,1770,1795,1471,1510,93,28,1656,1659,1700],"_links":{"self":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts\/2691"}],"collection":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/comments?post=2691"}],"version-history":[{"count":6,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts\/2691\/revisions"}],"predecessor-version":[{"id":2697,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts\/2691\/revisions\/2697"}],"wp:attachment":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/media?parent=2691"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/categories?post=2691"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/tags?post=2691"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}