In the latest 13F filing, Kepos Capital, a fund managed by Mark Carhart, disclosed its top ETF picks for the third quarter of 2014. Kepos Capital is a quant hedge fund with a special focus on exchange-traded funds – ETF. The fund had more than $93 million invested in ETFs in the latest filing. That signaled a significant decrease from nearly $157 million in ETF portfolio value in the previous report. Even in ETFs, Kepos Capital has a multi-strategy investment approach. The fund’s top three ETF picks are Vanguard REIT ETF (NYSEARCA:VNQ), iShares iBoxx $ High Yid Corp Bond (ETF) (NYSEARCA:HYG) and iShares MSCI Brazil Index (ETF) (NYSEARCA:EWZ).
Kepos Capital largest ETF bet is on Vanguard REIT ETF (NYSEARCA:VNQ). It closed the third quarter of 2014 with 327,500 ETFs in there, suggesting a decrease from 371,700 ETFs in the previous filing. The new position in Vanguard REIT ETF (NYSEARCA:VNQ) was valued at nearly $24 million in the latest report.
The second-largest ETF position in the portfolio of Kepos Capital at the close of the third quarter was iShares iBoxx $ High Yid Corp Bond (ETF) (NYSEARCA:HYG). Kepos Capital owned 252,400 exchange-traded funds there at the end of the third quarter of 2014. That position carried a value of more than $23 million. However, Kepos Capital’s holding in iShares iBoxx $ High Yid Corp Bond (ETF) (NYSEARCA:HYG) declined in the third quarter. It had 326,000 ETFs there as of the end of the second quarter of 2014.
Closing the list of Kepos Capital’s top three ETFs in the third quarter of 2014 was iShares MSCI Brazil Index (ETF) (NYSEARCA:EWZ). Kepos Capital held 490,900 EFTs there, all of which carries an estimated value of $21 million. The fund significantly reduced its exposure to iShares MSCI Brazil Index (ETF) (NYSEARCA:EWZ) in the latest filing. It owned more than 1.6 million ETFs there at the end of the second quarter of 2014.
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