WSJ – For years, hedge funds plied strategies out of most investors’ reach. As the exchange-traded-fund bandwagon rolls on, however, financiers are following the trend to try to mimic more of those strategies. For one manager, literally.
ETF Portfolio Management is using ETFs to create a twist on a hedge-fund strategy called “trend following,” which bets on sustained price movements to make returns with low correlation to the broad market. Trend-following funds are part of a group managing $92 billion that returned 18% last year when broader markets plunged, according to Hedge Fund Research. ETF Portfolio Management’s funds and the broad group of trend-following hedge funds have slightly negative returns in 2009.