Solactive Guru Index

Investing like the pros of the financial industry

 

Open End PERLES on the Solactive Guru Total Return Index

I. Cost efficient access to hedge fund expertise

Hedge funds use significant resources for the search of attractive investment opportunities. That is why their investment decisions are often the result of a costly and time-consuming process. Hedge funds usually demand high fees from their investors to finance these expenses. It is not unusual that a volume based yearly management fee of 2% and a performance fee of 20% are charged.

The index provider Solactive uses a publicly accessible document for the determination of the components of the Solactive Guru Total Return Index, which every investment company in the U.S. that surpasses a certain amount of assets under management has to disclose. Since this document shows the top positions of every hedge fund, the Open End PERLES on the Solactive Guru Total Return Index allows investors to participate one to one in these top equity positions. A management fee of 1.20% p.a. applies.

II. Why do U.S. investment companies and institutional investors have to disclose their positions?

The U.S. federal agency Securities and Exchange Commission (SEC) demands a minimum of transparency from every institutional investor with 100 million USD or more invested in U.S. equities. It includes a quarterly disclosure of every position held via the Form 13F. The name of this document comes from paragraph 13 (f) of the Securities Exchange Act, which demands the corresponding disclosure obligation since 1975. These companies are therefore obliged to disclose their equity positions within 45 days after the end of the quarter and to publish them on the SEC website.

III. Smart index concept

The Solactive Guru Total Return Index was created by the index provider Solactive AG. The index calculation started at 100 index points on 25 May 2012. The Solactive Guru Total Return Index is calculated as a performance index. This means that possible net dividends of the index members are reinvested in the index. The index is denominated in US-Dollars.

An adjustment of the index components takes place after the disclosure of the "13F" documents once in a quarter to cap-ture changing hedge fund positions. In such a case, the index members are equally weighted. However, before the top holding of each investment management company is included in the Solactive Guru Total Return Index, the hedge fund is selected earlier in a multi stage process. This includes e.g. eliminating hedge funds with high turnover from the hedge fund pool. In such a way, the main focus of the index is on investment companies with a long term investment horizon and an investment style which can be described as "value-oriented". In this regard it should be pointed out that the "13F" filings used to select the stocks in the index are filed by each hedge fund approximately 45 days after the end of each calendar quarter. Therefore a given hedge fund may have already sold its position by the time of the "13F" filing and the rebalancing of the index.

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