Billionaire-Tracking ETF Just Bulked Up On Health Care

Investing in some of the world’s top hedge funds may not be feasible for the majority of investors, yet that doesn’t mean they can’t participate in many of their best ideas.

The Direxion iBillionaire Index ETF IBLN is one example of an ETF that seeks to harvest the top holdings from a select group of billionaire investors. These famed strategists are required to report their largest positions on SEC Form 13F filings -- publicly-available information from which an index can be constructed.

IBLN selects 30 large-cap stocks from a pool of up to 10 billionaires and equal weights them across its portfolio. According to the fund company's website, “IBLN is designed to help long term-investors pursue a better portfolio outcome by seeking excess returns relative to the S&P 500 Index.”

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The latest IBLN rebalancing led to some interesting changes across the spectrum of holdings that reduced exposure to technology companies and bulked up on health care names. 

This ETF dropped the following stocks:

• Chesapeake Energy Corporation CHK - Energy
• EMC Corporation EMC - Technology
• Facebook Inc FB - Technology
• PVH Corp PVH – Consumer Discretionary
• Yahoo! Inc. YHOO - Technology

It subsequently added the following new positions:

• American Airlines Group Inc AAL - Industrials
• Applied Materials, Inc. AMAT - Technology
• DirecTV DTV – Consumer Discretionary
• Endo International ENDP – Health Care
• Humana Inc HUM – Health Care
• McKesson Corporation MCK – Health Care

After rebalancing, the portfolio continues to be heavily weighted toward consumer discretionary stocks at 30 percent. In addition, health care companies now make up 23 percent of the total assets and energy has been reduced to just a single stock at 3 percent.   

On a year-to-date basis, IBLN has gained 1.65 percent in total return versus 4.20 percent in the SPDR S&P 500 ETF SPY.

It’s natural to assume that an ETF such as IBLN will undergo periods of outperformance and underperformance based on its concentrated portfolio and strategic positioning.