New York (HedgeCo,net) – $26 billion ETF provider, ProShares, today launched a Hedge Replication ETF, based on Merrill Lynch’s recognized hedge fund replication model. The ETF, HDG, lists on the NYSE today.
“Many portfolios could benefit from the risk/return characteristics of hedge funds, but investors often either can’t or don’t invest in hedge funds because of a variety of challenges,” said Michael L. Sapir, Chairman and CEO of ProShare Advisors LLC, ProShares’ investment advisor. “We are pleased to offer an ETF that addresses challenges of hedge fund investing and may be, for many investors, an attractive alternative to hedge funds.”
HDG seeks to match, before fees and expenses, the performance of the “Merrill Lynch Factor Model(R) — Exchange Series” (MLFM-ES).(2) The MLFM-ES was developed by Merrill Lynch, a pioneer and leader in the field of hedge fund replication.
The MLFM-ES aims to provide the risk/return characteristics of a broad universe of hedge funds by targeting a high correlation to the HFRI Fund Weighted Composite Index, an equally weighted composite of more than 2,000 constituent hedge funds. The MLFM-ES aims to achieve its goal through long or short exposures to six market factors. The exposures are arrived at through regression analysis of index return data.
ProShares has 121 funds, more than $26 billion in assets and is part of ProFunds Group,(R) which was founded in 1997 and includes more than $32 billion in mutual fund and ETF assets.(4)
