Emles Advisors this week launched an ETF based on a long-short hedge fund-style strategy that focuses on sectors such as industrials, consumer discretionary and basic materials.
Managed by Nathan Miller, a former portfolio manager for NGM Asset Management, Citadel Investment Group and RBC Capital, the actively managed fund – Emles Alpha Opportunities ETF – is the seventh ETF launched by Emles since its inception Established in October last year. The new fund is the second ETF based on alternatives and follows the launch of its Protective Allocation fund.
“A hedge fund-like product and a publicly available ETF is the best of both worlds,” said Miller. Founded by veterans Gabriel Hammond and Dave Saxena, who worked together on Hammond’s previous venture, Alerian Capital, Emles was built on the premise of offering nontraditional investments that would suit both institutional and retail investors. “As a hedge fund, you basically can’t go to private investors at all,” Miller said. “We run a hedge fund-like product with the aim of outperforming the market during the cycle. This is not a product that you will find in ETF form – [where] There is better liquidity, better tax structures for investors and transparency. “
The idea of ”democratizing” alternatives is an area of growing interest for asset managers who want to bring their products to a wider audience beyond institutions. Private equity giant earlier this year KKR invests in iCapital Network To enable private investors to access private markets. Blackstone invested in the fintech platform two years earlier; it now offers products for retail investors in real estate, credit and hedge funds; the segment is accounted for eight percent of private equity under management early last year.
Despite the demand, according to a. only about five percent of US retail capital is used for alternative investments May 2020 report from BCG.
But the market is ripe for opportunities. Global financial wealth reached a record $ 250 trillion last year despite the economic uncertainties caused by the pandemic BCG report was released this week. The report also argued that an important opportunity for asset managers is to offer retail investors mutual funds and alternatives such as private equity and hedge funds, including what is known as the simple-needs segment, or the wealthy masses. These investments have long been out of the reach of individuals.
“This is the natural development for the MLP [master limited partnership] Marketplace and as the hedge fund marketplace evolves, ”said Hammond. “The biggest challenge is on the structuring side. Since these products have never been made before because Market Makers, APs, do not process these products, there is a lot of innovation when it comes to regulatory, execution and other issues. “We think that everything is like this” We will move with the times and we want to be ahead of the game. ”
Hammond and Miller, who invested $ 60 million in the new product, started the company as an ETF platform.
“This is another example of how we put our money where our mouth is,” said Hammond. “We have seen niches in the market and if there is a product or asset class or strategy that we find attractive and we want to find the right structure for us, we believe that both institutional and private companies will have an appetite.”
