The International Securities Exchange (ISE), a leading US options exchange, and AlphaClone LLC, the leader in hedge fund position replication, today announced their partnership to promote AlphaClone's innovative hedge fund position replication index, the AlphaClone Hedge Fund Long/Short Index.
Their partnership will serve as a platform to license and promote AlphaClone's proprietary hedge fund position replication approach to third parties seeking to provide access to alternative investment products.
This agreement combines the global experience of ISE with AlphaClone's distinct disclosure-based hedge fund replication approach, called cloning. Third-party licensees will be able to leverage ISE's business development and marketing support to effectively bring AlphaClone's innovative research and products to market.
"Our partnership with AlphaClone represents a new direction for ISE," said Gary Katz, President and CEO of ISE. "As we continue to expand our presence in indexes and exchange-traded products, we are looking for compelling opportunities to commit our resources to assist ETFs in coming to market. Our collaboration with AlphaClone is an excellent first initiative in this area."
"Partnering with a company such as ISE is a game changer for us and solidifies our leadership in disclosure-based investment research," said Maz Jadallah, CEO of AlphaClone. "Our ability to access ISE's expertise and resources going forward means our partners will know that they are backed by world class marketing and support."
"We are very excited to form this partnership with AlphaClone," said Kris Monaco, Head of New Product Development for ISE. "AlphaClone's innovative index methodology provides a new approach for tapping into the investing capabilities of established hedge funds. We look forward to working with AlphaClone to promote and license their indexes to third parties who want to create investible, intelligent hedge fund alternatives."
The first licensing agreement to bring AlphaClone's methodology to market was made with Exchange Traded Concepts in early 2012 to launch a new hedge fund position replication ETF. The AlphaClone Alternative Alpha ETF is expected to launch in the second quarter of 2012.
"Cloning" seeks to replicate the disclosed holdings of established hedge funds to achieve the potential for alpha inherent in these portfolios. AlphaClone's rules-based index construction, rebalancing and risk management methodology seek to provide investors "virtual fund of fund" investment strategies that retain the potential to generate alpha but are low cost, liquid and transparent.