The world of Exchange-Traded Funds (ETFs) is now witnessing a new trend – funds that aim to replicate the investment strategies of famous investors like Warren Buffett, Bill Ackman, and Cathie Wood. But are these “copycat” ETFs worth the investment?
What Happened: This trend has taken shape in two distinct forms, with celebrity ETFs gaining traction through either direct involvement from star investors or by replicating their publicly disclosed trades, according to an Investopedia report on Monday.
The first type, represented by the Dan Ives Model, involves direct involvement from the star investor. A prime example is the Dan Ives Wedbush AI Revolution ETF (NYSE:IVES), which comprises 30 AI-related stocks personally selected by the tech analyst.
Despite its “passive” approach, the fund has amassed over $400 million in assets and an expense ratio of 0.75%.
The second type, represented by VistaShares, tracks the moves of famous investors without their involvement. VistaShares’ strategy builds on the success of its Buffett-tracking fund, the VistaShares Target 15 Berkshire Select Income ETF (NYSE:OMAH), which has grown to over $440 million in assets.
VistaShares is set to launch similar funds tracking investors like Ackman and Michael Burry.
Despite their initial success, these copycat ETFs face challenges such as time lags and high fees, which could impact their long-term performance.
Why It Matters: The rise of celebrity ETFs reflects a growing trend of investors seeking to replicate the strategies of successful market players.
This trend has been further fueled by the impending departure of Warren Buffett as CEO of Berkshire Hathaway (NYSE:BRK) (NYSE:BRK), prompting investors to look for alternative ways to benefit from his investment approach.
Additionally, the success of the Dan Ives Wedbush AI Revolution ETF (IVES) could be attributed to Ives’ strong track record in the tech industry and his strategic selection of AI-related stocks.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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