International Securities Exchange and AlphaClone Announce Partnership to License and Promote Innovative Hedge Fund Position Replication Index
The International Securities Exchange (ISE), a leading US options exchange, and AlphaClone LLC, the leader in hedge fund position replication, today announced their partnership to promote AlphaClone’s innovative hedge fund position replication index, the AlphaClone Hedge Fund Long/Short Index.
Their partnership will serve as a platform to license and promote AlphaClone’s proprietary hedge fund position replication approach to third parties seeking to provide access to alternative investment products.
This agreement combines the global experience of ISE with AlphaClone’s distinct disclosure-based hedge fund replication approach, called cloning. Third-party licensees will be able to leverage ISE’s business development and marketing support to effectively bring AlphaClone’s innovative research and products to market.
“Our partnership with AlphaClone represents a new direction for ISE,” said Gary Katz, President and CEO of ISE. “As we continue to expand our presence in indexes and exchange-traded products, we are looking for compelling opportunities to commit our resources to assist ETFs in coming to market. Our collaboration with AlphaClone is an excellent first initiative in this area.”
“Partnering with a company such as ISE is a game changer for us and solidifies our leadership in disclosure-based investment research,” said Maz Jadallah, CEO of AlphaClone. “Our ability to access ISE’s expertise and resources going forward means our partners will know that they are backed by world class marketing and support.”
“We are very excited to form this partnership with AlphaClone,” said Kris Monaco, Head of New Product Development for ISE. “AlphaClone’s innovative index methodology provides a new approach for tapping into the investing capabilities of established hedge funds. We look forward to working with AlphaClone to promote and license their indexes to third parties who want to create investible, intelligent hedge fund alternatives.”
The first licensing agreement to bring AlphaClone’s methodology to market was made with Exchange Traded Concepts in early 2012 to launch a new hedge fund position replication ETF. The AlphaClone Alternative Alpha ETF is expected to launch in the second quarter of 2012.
“Cloning” seeks to replicate the disclosed holdings of established hedge funds to achieve the potential for alpha inherent in these portfolios. AlphaClone’s rules-based index construction, rebalancing and risk management methodology seek to provide investors “virtual fund of fund” investment strategies that retain the potential to generate alpha but are low cost, liquid and transparent.
The International Securities Exchange (ISE) operates a leading U.S. options exchange and offers options trading on over 2,000 underlying equity, ETF, index, and FX products. As the first all-electronic options exchange in the U.S., ISE transformed the options industry by creating efficient markets through innovative market structure and technology. Regulated by the Securities and Exchange Commission (SEC) and a member-owner of The Options Clearing Corporation (OCC), ISE provides investors with a transparent marketplace for price and liquidity discovery on
centrally cleared options products. ISE continues to expand its marketplace through the ongoing development of enhanced trading functionality, new products, and market data services. As a complement to its options business, ISE has expanded its reach into multiple asset classes through strategic investments in financial marketplaces and services that foster technology innovation and market efficiency. Through minority investments, ISE participates in the securities lending and equities markets. ISE also licenses its proprietary Longitude technology for trading in event-driven derivatives markets.
As a member of Eurex Group, ISE is combined with Eurex Exchange to form one of the largest transatlantic derivatives marketplaces, with daily trading volumes exceeding 10 million contracts in 2011 across a growing range of asset classes.
Eurex Group is comprised of Eurex Exchange, the International Securities Exchange, the European Energy Exchange, Eurex Clearing, Eurex Bonds and Eurex Repo.
Eurex Group is owned by Deutsche Börse AG (Xetra: DB1).
For more information, visit www.ise.com.
About AlphaClone LLC
AlphaClone is a registered investment advisor and equity research firm that is a leader in the field of hedge fund position replication. AlphaClone’s investment products and solutions are derived from institutional investor public disclosures and give investors direct access to stock positions favored by established hedge funds. The firm’s proven, intelligent, risk managed, portfolio construction approach seeks to provide liquid, transparent, low-fee strategies that give investors exposure to the alpha potential inherent in hedge fund investments. AlphaClone’s innovative investment research and strategies are available to investors through managed accounts, exchange-traded products and an online research services. The firm is based in San Francisco, California. For more information visit www.alphaclone.com.
About the AlphaClone Hedge Fund Long/Short Index
The Index is composed of U.S. equity securities selected based on a proprietary hedge fund position replication methodology developed by AlphaClone, LLC. The methodology ranks hedge funds and institutional investors based on the efficacy of replicating their publicly disclosed positions and selects equities from those managers with the highest ranking. To manage risk, the Index employs a dynamic hedging mechanism that can vary the index from being 100% long to up to 50% short, or “market hedged,” based on market volatility targets defined by the methodology.
International Securities Exchange
Joe Anthony, Gregory FCA for AlphaClone
The fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. The prospectus contains this and other important information about the investment company, and it may be obtained here. Read it carefully before investing.
The information in this communication is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This communication is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
Investments involve risk. Principal loss is possible. The AlphaClone Alternative Alpha Fund has the same risks as the underlying securities traded on the exchange through out the day. Redemptions are limited and often commission are charged on each trade. The fund can make short sales of securities, which involves the risk that losses in securities may exceed the original amount invested in a security. Investments by the fund in derivatives involve risks different from, and in certain cases, greater than the risks presented by more traditional investments. The fund is non-diversified, meaning it may concentrate its assets in fewer individual holdings than a diversified fund. Therefore, the Fund is more exposed to individual stock volatility than a diversified fund.
The AlphaClone Hedge Fund Long/Short Index represents equity securities that are favored by hedge funds and institutional investors in their public disclosures. The index is equal weighted with an overlap bias which gives a security held by twice the number of managers twice the weight. The index is reconstituted quarterly and can vary between being long only and market neutral. It is not possible to invest directly in an unmanaged index. Alpha is the abnormal return on a security or portfolio in excess of what would be predicted by an equilibrium model like the Capital Asset Pricing Model (CAPM).
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The AlphaClone Alternative Alpha Fund is distributed by Quasar Distributors LLC. The fund’s investment advisor is Exchange Traded Concepts LLC which is not affiliated with the index owner, AlphaClone LLC, or Quasar Distributors.