Hedgeye Launches ETF Targeting 40 Stocks Pre-Index Additions With 20% Cap
ADDS•Hedgeye Asset Management launched the actively managed Hedgeye Index Adds ETF (ADDS), targeting approximately 40 U.S. equities poised for addition to major indices with a 20% per-name cap and monthly rebalances. The fund uses proprietary machine learning to forecast index inclusions and exits at market-on-close.
1. ETF Launch and Objective
Hedgeye Asset Management introduced the Hedgeye Index Adds ETF (ADDS) to capture potential gains from forced buying when companies enter major U.S. indices such as the S&P 500, S&P 400, S&P 600 and Nasdaq 100. The strategy aims for long-term capital appreciation by anticipating index reconstitutions and positioning ahead of passive fund flows.
2. Portfolio Construction and Process
ADDS typically holds around 40 U.S. equities that meet or are expected to meet eligibility criteria for target benchmarks, applying a 20% per-name cap and following a disciplined monthly rebalance cycle. The fund leverages proprietary machine learning models to assign probabilistic forecasts of index additions, entering positions beforehand and exiting at market-on-close on the addition date.
3. Management Team and Expertise
The ETF is managed by Brooks Cutright, who brings a 19-year track record in index-event trading with roles at DRW, ExodusPoint, Deutsche Bank and BofA Merrill Lynch. Hedgeye Asset Management emphasizes a repeatable, research-driven process and risk management discipline in delivering differentiated active strategies.
