Dallas-based Highland Capital Management has made several moves to bolster its alternative offerings in 2015. Earlier this year, the company announced plans to launch a series of 17 alternative ETFs. On March 23, Highland underscored its commitment to liquid alts by debuting the Highland Alternative Investors platform and naming Managing Director Michael Gregory the platform’s CIO. Then on June 1, Highland launched the first three of the 17 new ETFs:
- Highland HFR Global ETF (HHFR)
- Highland HFR Event Driven ETF (DRVN)
- Highland HFR Equity Hedge ETF (HHDG)
“The launch of these three ETFs further demonstrates Highland’s commitment to pursuing alternative beta solutions,” said Ethan Powell, Chief Product Strategist for Highland, in a recent statement. “We believe that our collaboration with HFR on these new products illustrates Highland’s dedication to delivering tailored products to meet investor demands.”
HFR Global ETF
The Highland HFR Global ETF provides broad global hedge fund exposure, or hedge fund “beta,” by investing in debt and equity securities of U.S. and international companies. The fund’s aim is to provide results that correspond with its benchmark, the HFRL Global Index, which is an index of hedge funds.
The fund’s holdings do not include hedge funds, but are constructed to track the returns of the benchmark, which is constructed using “a proprietary filtering, monitoring, and quantitative selection process.” The hedge fund strategies included in the underlying index are:
- Event Driven
- Relative Value
- Equity Hedge
The fund’s net-expense ratio is 0.85%.
HFR Event Driven ETF
The Highland HFR Event Driven ETF tracks the HFRL Event Driven Index using a similar methodology as the Highland HFR Global ETF. The underlying index tracks the returns of hedge funds that employ event-driven strategies, and the fund emulates these results by holding a sampling of securities from the underlying index. The fund’s net-expense ratio is 0.85%.
HFR Equity Hedge ETF
The Highland HFR Equity Hedge ETF tracks the HFRL Equity Hedge Index, and attempts to mirror its returns by holding the sampling of securities that will represent those held by the index. The index aims to track returns of hedge funds that employ equity hedge (or long/short) strategies. Like Highland’s other new ETFs, the HFR Equity Hedge ETF has a 0.85% net-expense ratio.
Other Highland Funds
In addition to the three ETFs launched on June 1 and the 14 expected to debut later this year, Highland Capital Management has 12 mutual funds and one ETF in its catalog of offerings. Six of its mutual funds are classified as alternatives:
- Highland Energy MLP Fund (HEFAX)
- Highland Floating Rate Opportunities Fund (HFRAX)
- Highland Global Allocation Fund (HCOAX)
- Highland Long/Short Equity Fund (HEOAX)
- Highland Long/Short Healthcare Fund (HHCAX)
- Highland Opportunistic Credit Fund (HNRAX)
Highland’s initial ETF, the Highland/ iBoxx Senior Loan ETF (SNLN) returned 1.67% for the year ending May 31, 2015. By comparison, the PowerShares Senior Loan ETF (BKLN) returned 2.01% for the same period.