John Del Vecchio’s new Active Bear Exchange Traded Fund, HDGE, is the opposite of what you’d expect: it’s relatively expensive in a category dominated by low-cost funds, it’s transparent in a field (shorting) that’s all about secrecy, and though it was only launched a month ago, it’s already collected $37.7 million in assets under management.
ETFs have grown into a $1 trillion asset class largely because they’re a cheaper version of index mutual funds. But HDGE is part of a new breed of ETFs, funds that are not just passive plays on an index, but are instead actively managed, requiring expertise and research, and carrying higher fees.
Like their Index-shadowing bretheren, actively-managed ETFs trade throughout the day like any stock does, while mutual funds can only be bought and sold at the end of the day. ETFs also must list their holdings at the close of the day, unlike funds which disclose that information quarterly. That’s an especially interesting wrinkle for HDGE, given the secrecy in which shorting stocks is generally conducted. Continue reading