The most popular ETF among the investors in our database is SPDR S&P 500 ETF Trust (NYSEARCA:SPY) and it has always been the most popular. While many hedge funds hold ‘Put’ options underlying SPY for hedging reasons, there are also many funds that are long the ETF. At the end of the third quarter of 2017, there were 82 funds long SPDR S&P 500 ETF Trust (NYSEARCA:SPY), up from 73 funds a quarter earlier. At the beginning of 2017, there were 86 funds holding shares of SPDR S&P 500 ETF Trust (NYSEARCA:SPY). The key benefit of holding shares of SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is diversification and its performance roughly mimics the returns of the S&P 500 Index, which makes it a great holding in a bull market.
Then there’s iShares Russell 2000 Index (ETF) (NYSEARCA:IWM), which offers market-cap-weighted exposure to the Russell 2000 Index, which includes the a broad basket of small-cap stocks and is considered the benchmark for funds that invest in small-caps. iShares Russell 2000 Index (ETF) (NYSEARCA:IWM) has a very large portfolio given the index that it tracks and is highly diversified across sectors, with Financial Services, Technology and Healthcare amassing the largest shares. Given the healthy state of the US economy and the recent tax cuts, small-cap stocks should see a good year and iShares Russell 2000 Index (ETF) (NYSEARCA:IWM) is the best by offering exposure to the benchmark index of the small-cap space. At the beginning of October, there were 54 investors tracked by us long iShares Russell 2000 Index (ETF) (NYSEARCA:IWM), compared to 42 funds three quarters earlier.
Holding gold is a great way to diversify a portfolio in addition to stocks and bonds, but buying physical gold is cumbersome and holding gold futures or gold certificates also has its drawbacks. Nevetheless, gold serves as a great protection in periods of market turmoil. SPDR Gold Trust (ETF) (NYSEARCA:GLD) is an ETF that tracks gold prices and offers investors the possibility to get exposure to the commodity in a more convenient way. Given the multitude of opinions that the market is overheated and the correction is underway and the continuing weakness in US dollar, gold prices might climb higher as investors are looking for safe havens. There were 43 funds from our database long SPDR Gold Trust (ETF) (NYSEARCA:GLD) at the end of September, up from 39 funds at the end of June, although a year earlier there were 64 funds long the ETF.
Emerging markets went through a comeback in the last couple of years as commodity prices started to increase and several important countries in this sector, such as Brazil, have returned to economic growth and overcame political gridlock. In this way, emerging markets look like compelling investments, although they are still risky and might not be so attractive as central banks in developed countries are tightening monetary policies. iShares MSCI Emerging Markets Indx (ETF) (NYSEARCA:EEM) is the ETF that offers a broad exposure to emerging markets as it holds 47% of its portfolio invested in emerging Asian countries, 12.30% in Latin America and nearly 8% in Middle East and Africa. Hedge funds in our database also warmed up towards emerging markets last year, as during the first nine months, the number of funds long iShares MSCI Emerging Markets Indx (ETF) (NYSEARCA:EEM) went up to 31 from 22.
Disclosure: none
