Tags: guru | fund | invest | copy

'Guru Funds' Arise to Replicate Success of Star Investors

By    |   Tuesday, 14 January 2014 07:29 AM

New exchange-traded funds (ETFs) and mutual funds have been created to copy the successful strategies of star investors.

These new funds are known as guru funds, The New York Times reports. It cites two ETFS — The Guru Index ETF and the AlphaClone Alternative Alpha ETF — and one mutual fund — Virtus Wealth Masters fund.

The managers of the funds research public filings to find stocks held by top hedge funds and successful investors and entrepreneurs. The ETFs then create indices around these holdings.

Editor’s Note:
Free Video — ‘Rogue Calendar’ Could Turn 490% Profits

The idea is to give fund holders a crack at investing like Berkshire Hathaway CEO Warren Buffett, for example.

But analysts express some skepticism.

"This sounds like a good starting point for an investment analysis," Josh Charney, a Morningstar analyst, tells The Times.

"But if there were a way to make money using one factor to make investment decisions, everyone would be doing it. There are better and smarter ways to invest, such as buying value stocks that don't rely on copying other people."

Hedge funds report their biggest stock holdings quarterly, and public companies regularly report their largest stock holders. But much of this information is released with a lag and is incomplete.

In any case, most investors borrow the ideas of others, says Aaron Katsman, CEO of Lighthouse Capital in Israel.

"Investors want to think that they are getting original, one-of-a-kind investment ideas, but in reality they tend to 'imitate' investments all the time," he writes in an article for Seeking Alpha.

"Whether it's reading about an analyst recommendation on a certain stock or hearing a hot pick on Bloomberg or even around the water cooler, very few investors actually come up with their own ideas."

Editor’s Note: Free Video — ‘Rogue Calendar’ Could Turn 490% Profits

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New exchange-traded funds (ETFs) and mutual funds have been created to copy the successful strategies of star investors.
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2014-29-14
Tuesday, 14 January 2014 07:29 AM
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