Newly-proposed funds need to sit quietly for 75 days. During that time the Securities and Exchange Commission staff reviews their prospectuses and has the right to demand changes. If the SEC doesn’t object, the advisor earns the right – but not the obligation, oddly enough – to release the fund to the public. Funds currently in registration are apt to launch at the end of September so that they will be able to report complete results for the fourth quarter of 2016.
Setting aside whacko ideas (The Wearable Technology ETF? Did we learn nothing from the adventures of the 3D Printing ETF? Or the Obesity ETF?), there were 13 new no-load retail funds or active ETFs in registration this month. Two stand out:
Janus Short Duration Income ETF will take on PIMCO Enhanced Short Maturity Active ETF (MINT) as an option for investors who can’t afford to earn zero (or less than zero) on their cash holdings. The new fund benefits from the presence of Nick Maroutsos and Kumar Palghat. Both are former PIMCO managers who co-founded Kapstream Capital, which was purchased by Janus in 2015.
JOHCM International Opportunities Fund combines an absolute value orientation (“we won’t buy things just for the sake of buying things”), a very concentrated portfolio and the skills of a very well-respected British investment house, J O Hambro Capital Management. The expenses are reasonable though the share class structure is a bit opaque; in addition to a high-minimum institutional class, there are two classes with no defined minimum at all. Those appear aimed at giving brokerages the opportunity to set the ground rules for their investors.
And, too, Joel Greenblatt and the Gotham guys are launching four more institutional funds: Gotham Absolute Core, Enhanced Core, Hedged Core and Index Core funds. You’re welcome to read about them if you like.
Active Alts Contrarian ETF (SQZZ)
Active Alts Contrarian ETF (SQZZ) seeks current income and capital appreciation. The plan is to invest in foreign and domestic stocks where the manager expects a “short squeeze” might occur. That is, they’ll look for stocks that lots of people have unjustifiably shorted and try to ride the short-covering rally up. Bon chance! The fund will be managed by Brad Lamensdorf, founder and President of the Active Alts. He’s a hedge fund guy and a newsletter writer. The initial expense ratio hasn’t been released, but the management fee is an unsustainable 1.55%. Given that it’s an active ETF, there’s no minimum investment.
AdvisorShares Focused Equity ETF
AdvisorShares Focused Equity ETF seeks long term capital appreciation. The plan is to buy US-listed stocks using “use a variety of methods.” They expect “low turnover,” which they suggest means “no more than 100% a year.” (Uhhh … the average turnover rate for US large cap funds is 65% while folks like LEXCX (0%) and DGAGX (6%) set the standard for what “low turnover” means.) The fund will be managed by Edward Elfenbein of AdvisorShares. Mr. Elfenbein has been following this discipline since 2006 and publishes it annually as the Crossing Wall Street “Buy List.”The initial expense ratio is 0.75%, after waivers. Given that it’s an active ETF, there’s no minimum investment.
Centre Global Infrastructure Fund
Centre Global Infrastructure Fund seeks long-term growth of capital. The plan is to invest in the stock of firms that derive the majority of their earnings from infrastructure, a term that they define very, very broadly: railroads, toll roads, bridges, tunnels, airports, parking facilities, seaports, electric transmission and distribution lines, power generation facilities, oil, gas and water distribution facilities, communications networks and satellites, sewage treatment plants, critical internet networks, hospitals, courts, schools, correctional facilities and subsidized housing). The fund will be managed by Xavier Smith. The initial expense ratio is 1.40% for Investor shares. The minimum initial investment is $5,000.
FundX Sustainable Investor
FundX Sustainable Investor will seek long-term capital appreciation without regard to income. The plan is to be a fund of SRI funds and then to apply the same momentum-based Upgrader strategy (buy funds will strong recent performance, sell the others). The fund will be managed by a team from FundX Investment Group. The initial expense ratio is 1.91% including a 1.0% management fee. The minimum initial investment is $1,000.
Green Century MSCI International Index Fund
Green Century MSCI International Index Fund seeks to match the long-term total return of an ESG-screened international index. The plan is to track the MSCI World ex USA SRI ex Fossil Fuels Index; at base, it’s a custom index that starts with an international SRI index then removes anyone who smells of hydrocarbons. The fund will be managed by Steven Santiccioli and Michael O’Connor of Northern Trust. The initial expense ratio is 1.28% for Investor shares. The minimum initial investment is $2500, reduced to $1000 for various tax-advantaged accounts or those set up with an automatic investing plan.
Janus Short Duration Income ETF
Janus Short Duration Income ETF seeks a steady income stream with capital preservation across various market cycles. The plan is to invest in a global portfolio of short duration securities and cash, so that the portfolio’s overall duration will sit in the 0-2 year range. The fund will be managed by Nick Maroutsos and Kumar Palghat. Both are former PIMCO managers who co-founded Kapstream Capital, which was purchased by Janus in 2015. Mr. Palghat has spent the last year co-managed Janus Unconstrained Global Bond with The Former Bond King. The initial expense ratio has not been disclosed. Given that it’s an active ETF, there’s no minimum investment.
JOHCM International Opportunities Fund
JOHCM International Opportunities Fund seeks long-term total return by investing in a concentrated portfolio of international equity securities. The plan is to follow an absolute value discipline in managing the portfolio. Here’s their discussion: “A key risk to any investor is permanent impairment of capital. This is usually a result of holding overvalued assets. Therefore, the Adviser maintains a strict valuation discipline to make sure assets are only bought when they are attractively valued, in absolute terms, with reference to their intrinsic value. At the same time, overvalued shares in the portfolio are identified and sold. This requires an ability to sell to cash, without necessarily having anything to buy with the proceeds.” The fund will be managed by Ben Leyland and Robert Lancastle of J O Hambro Capital Management. There are three share classes with expenses ranging from 0.89% – 1.14%. The minimum initial investment is $1 million for institutional shares, but it looks like Class II shares will be available through brokerages with minimums set by those brokers.
Leader Floating Rate Fund
Leader Floating Rate Fund seeks a high level of current income with maybe a bit of growth. The plan is to invest in a global portfolio of floating rate debt securities rated A or better by Standard & Poors. They can invest in other fixed income stuff, but it must be dollar-denominated. The fund will be managed by John E. Lekas, founder of Leader Capital. The initial expense ratio for Investor shares is 1.43%, 50 bps above the Institutional share charge. The minimum initial investment is $2,500.
SGA International Equity Fund
SGA International Equity Fund seeks both current income and long-term capital appreciation. In this case, “international” means “global,” at least 40% non-U.S . The investment strategy is a sort of mish-mash of top-down, bottom-up and occasionally through the side door (with derivatives). The fund will be managed by a Strategic Global Advisors team lead by CIO Cynthia Tusan. The initial expense ratio is 1.45%. The minimum initial investment is $10,000.
SGA International Equity Plus Fund
SGA International Equity Plus Fund seeks both current income and long-term capital appreciation. The strategy text looks about the same as their International (i.e. Global) Equity fund, so I’m not sure what the “Plus” is. The fund will be managed by a Strategic Global Advisors team lead by CIO Cynthia Tusan. The initial expense ratio is 1.60%. The minimum initial investment is $10,000.
SGA International Small Cap Equity Fund
SGA International Small Cap Equity Fund seeks both current income and long-term capital appreciation. The plan is to invest in a global portfolio of small cap stocks. The fund will be managed by a Strategic Global Advisors team lead by CIO Cynthia Tusan. The initial expense ratio is 1.65%. The minimum initial investment is $10,000.
SGA Global Equity Fund
SGA Global Equity Fund seeks both current income and long-term capital appreciation. The strategy section is pretty much identical to the comparable section in their International fund prospectus, so I’m wondering if there was a copy-and-paste error. The fund will be managed by a Strategic Global Advisors team lead by CIO Cynthia Tusan. The initial expense ratio is 1.45%. The minimum initial investment is $10,000.
Yieldshares CWP Dividend & Option Income ETF
Yieldshares CWP Dividend & Option Income ETF seeks to provide current income with maybe a bit of growth. The plan is to invest in U.S. stocks and then sell covered call options on at least some of them. The fund will be managed by Kevin Simpson and Josh Smith of Capital Wealth Planning and Dustin Lewellyn, Chief Investment Officer of Penserra Capital Management. Presumably one crew handles the equities and the other handles the options. The initial expense ratio has not been disclosed. Given that it’s an active ETF, there’s no minimum investment.
