Jason Kephart, writing for SmartMoney looks into the newly released ETF the “IQ Hedge Macro Tracker” (MCRO). He states that: “The ETF is based on the IQ Hedge Macro Index, which mimics hedge fund returns based on a global macro and emerging market strategy, but the ETF uses a backwards looking analysis to re-balance at the end of every month. In short, it takes the hedge fund returns from the last month, say May, and restructures its portfolio in an attempt to match the strategies that worked to generate similar returns in June.
Yes, you read that right — the ETF is perpetually aping strategies executed a month ago. One obvious problem: Using monthly returns to re-balance makes it very difficult for the fund to know what the hedge funds were investing in.”
For the whole story click: HERE