MW TOPS Global Alpha ETF

Morningstar Europe Editor 24 February, 2011 | 6:00PM
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The MW TOPS Global Alpha ETF (MWTS) aims to track the returns generated by the Marshall Wace investment TOPS process, which consists of physically investing in equities on the basis of investment ideas from brokers. The fund follows a long-short market neutral strategy and is predominantly composed of approximately 2000 names from major world indices (e.g. MSCI Europe, MSCI Americas, S&P 500, FTSE 100 and Topix Indices).

Cons:
Marshall Wace doesn’t disclose the fund’s actual holdings. Disclosure is limited to a weekly report stating the total number of long and short positions, the regional and country exposures and the sector equity exposures.

This fund is one of the most expensive of all European hedge fund ETFs, levying an exorbitant TER of 1.75% per year plus underlying hedge fund fees (probably 1.5-2% and a 20% performance fee) although this couldn’t be confirmed with the company which refused to discuss the fund’s cost structure.

Investors should also be aware that the single investment policy of this fund (it only invests in Marshall Wace) exposes them to single manager risk.

The MW TOPS Global Alpha ETF has performed poorly since its inception in March 2010 (see table below). This compares badly with the advertised target return of 8-10% net per year with target volatility of 3-5% net per year.

The MW TOPS Global Alpha ETF is denominated in USD, EUR and GBP.

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