Marshall Wace Asset Management, one of the pioneers of publicly-listed hedge fund vehicles, is going a step further, planning an exchange-traded fund to track its flagship strategy.
The London-based firm, which has seen its assets under management drop by two-thirds of the past two years, will list its Tops Global Alpha ETF on both the London Stock Exchange and Deutsche Börse. It will be the first ETF designed to track a single hedge fund manager, in this case Marshall Wace’s Tops strategy, rather than an index. Tops itself includes six separate hedge fund strategies.
Marshall Wace was also among the first hedge funds to create closed-end exchange-listed hedge funds, listing its MW Tops fund in Amsterdam in 2006. But unlike closed-end funds, which have a set number of shares and are thus prone to trading at either a discount or premium to a fund’s net asset value, ETFs issue shares based on demand.
The firm hopes to raise US$500 million for the Tops ETF, and is targeting an annual return of between 8% and 10%. The ETF will charge only 0.25% annually, but investors in it will still pay the 1.5% management fee and 20% performance fee charged by the underlying Tops funds.