Before funds can be offered to the public, they’ve got to be submitted to the SEC which has 70 days to review the application. That means that funds hopeful of launching by December 30th need to be filed by October 15th. This month’s 15 new funds, including offerings from both DoubleLine and T. Rowe Price, represent the first part of that year-end wave.
Aware Ultra-Short Duration Enhanced Income ETF
Aware Ultra-Short Duration Enhanced Income ETF , an actively-managed ETF, seeks to maximize current income targeting a yield of 0.75% to 1.00% over the yield of the most recently issued 3-month U.S. Treasury bill. The plan is to buy bonds with a duration under one year; there’s no particular explanation of how they plan to outperform a T-bill other than by maintaining a longer duration. The fund will be managed by a team headed by John E. Kaprich of Aware Asset Management. Its opening expense ratio has not been released.
Catalyst Enhanced Income Strategy Fund
Catalyst Enhanced Income Strategy Fund will seek current income. The plan is to primarily invest in agency and non-agency residential mortgage backed securities, with up to 15% illiquid securities. The fund will be managed by Leland Abrams and Brandon Jundt. Its opening expense ratio is 1.53%, and the minimum initial investment for the no-load “I” shares will be $2,500.
DoubleLine Colony Enhanced Real Estate Income Fund
DoubleLine Colony Enhanced Real Estate Income Fund will seek total return which exceeds the total return of its benchmark index over a full market cycle. The plan is to use derivatives to replicate performances of the Dow Jones US REIT Index then to invest essentially all of the fund’s assets in debt instruments managed by DoubleLine. As a practical matter, the fund will normally be leveraged to 200% of its actual assets: 100% notional exposure to the REIT index plus 100% exposure to bonds. In theory, you should get the return of the REIT index plus the returns of the bond portfolio; both, however, might be negative in any given period so that you could enjoy double losses. The fund will be managed by The Gundlach and Jeffrey Sherman . Its opening expense ratio has not been published, and the minimum initial investment will be $2,000 for retail shares.
John Hancock Global Thematic Opportunities Fund
John Hancock Global Thematic Opportunities Fund will seek capital appreciation by investing mainly in equities of companies that may benefit from global long-term market themes. The fund will be managed by Hans Peter Portner and Gertjan Van Der Geer of Pictet Asset Management. Its opening expense ratio is 1.28% for “A” shares, which also carry a 5.0% load. We normally ignore load-bearing funds, but load-waived versions are widely available so we let it in. The minimum initial investment will be $1,000.
JPMorgan Corporate Bond Research Enhanced ETF
JPMorgan Corporate Bond Research Enhanced ETF, an actively-managed ETF, seeks to provide total return. The plan is to buy investment grade bonds and beat its benchmark by “overweighting securities with higher credit scores” and by being smart about which sectors of the economy to invest in. The fund will be managed by a team led by Lisa Coleman. Its opening expense ratio has not been released.
Mesirow Financial Core Bond Fund
Mesirow Financial Core Bond Fund will seek maximize total return through capital appreciation and current income consistent with preservation of capital. The plan is to buy government bonds, municipal bonds, corporate bonds, residential and commercial mortgage-backed securities, asset-backed securities, convertible securities, loan participations and assignments, and U.S. dollar-denominated foreign debt securities. They maintain a duration pretty close to their benchmarks and believe “the majority of available excess returns can be captured through yield curve positioning, sector allocation and issue selection.” The fund will be managed by a team from Mesirow Financial, headed by Peter W. Hegel. Its opening expense ratio is 0.85%, and the minimum initial investment will be $5,000.
Mesirow Financial High Yield Fund
Mesirow Financial High Yield Fund will seek high level of current income consistent with the preservation of principal. The plan is to buy junk bonds and to select them through the lens of “various criteria such as historical and future expected financial performance, management tenure and experience, capital structure, free cash flow generation, barriers to entry, security protections, yield and relative value, and ownership structure.” The fund will be managed by a team headed by Robert Sydow. Its opening expense ratio is 1.0%, and the minimum initial investment will be $5,000.
Mesirow Financial Small Cap Value Fund
Mesirow Financial Small Cap Value Fund will seek long-term capital appreciation with less volatility than the U.S. small cap value market. The plan is to build a “well-diversified portfolio with broad representation across market industries and sectors,” focusing on attractively valued securities with “potential catalysts that are expected to lead to accelerated earnings and cash flow growth.” The fund will be managed by Kathryn A. Vorisek and Leo Harmon. Its opening expense ratio is 1.23%, and the minimum initial investment will be $5,000.
Northern Cross International Fund
Northern Cross International Fund will seek long-term total return, principally from growth of capital. The plan is to use a bottom-up discipline to construct a portfolio of 40-80 stocks from the developed and developing worlds. The fund will be managed by Howard Appleby, Jean-Francois Ducrest, and James LaTorre. The record provided for their separate account composite is a bit odd: they’ve trailed their benchmark in each of the past five years after leading it for eight consecutive years. Its opening expense ratio is 0.65%, and the minimum initial investment will be $10,000. The prospectus helpfully notes, “You may purchase or redeem shares directly from the Fund by calling **** VARIABLE Fund_ PhoneNumbers is not defined **** (toll free).”
Quadratic Interest Rate Volatility and Inflation Hedge ETF
Quadratic Interest Rate Volatility and Inflation Hedge ETF , an actively-managed ETF, seeks to hedge the risk of rising long-term interest rates, an increase in inflation and inflation expectations, and an increase in interest rate volatility, while providing inflation-protected income. The plan is to “invest in a mix of U.S. Treasury Inflation-Protected Securities and long options tied to the shape of the interest rate yield curve.” The fund will be managed by Nancy Davis of Quadratic Capital Management. Its opening expense ratio has not been disclosed.
Reynders McVeigh Core Equity Fund
Reynders McVeigh Core Equity Fund will seek capital preservation and long-term capital growth. The plan is to pursue a pretty typical “good companies at a fair price” strategy, with at least 60% in domestic stocks with market caps above $15 billion. The fund will be managed by Charlton “Chat” Reynders, III, Patrick McVeigh and Eric Shrayer . Its opening expense ratio is 1.01%, and the minimum initial investment will be $1,000. I can’t, for the life of me, figure out why 1.01% is a good idea. They’re waived 43 bps in fees but decide to plant themselves in the “above 1.0%” range so that they lose in any screen that sets expenses at or below 1.0%. Odd.
SGA International Small-Mid Cap Equity Fund
SGA International Small-Mid Cap Equity Fund will seek total return, consisting of current income and long-term capital appreciation. The plan is to invest, directly or indirectly, in a portfolio of international small to mid-cap caps. “The Adviser integrates a systematic, quantitative screening process with traditional research and active risk management,” they promise. The fund will be managed by a team headed by Cynthia Tusan, CFA, President of Strategic Global Advisers. Its opening expense ratio is 1.40%, and the minimum initial investment will be $10,000.
Strategy Shares Drawbridge Dynamic Allocation ETF
Strategy Shares Drawbridge Dynamic Allocation ETF, an actively-managed ETF, seeks long term capital appreciation. The plan is to invest in eight sub-strategies, each of which has “rotation” in its name and each of which targets “the top performing ETF” (or ETFs) in eight different asset classes. If you’re wondering what could possibly go wrong, check “Principal Risk Factors” in the Prospectus but be sure to give yourself a bit of time: it runs from page 12 to page 38. The fund will be managed by Matthew B. Tuttle of Tuttle Asset Management. Its opening expense ratio is 1.37%.
T. Rowe Price Dynamic Credit Fund
T. Rowe Price Dynamic Credit Fund will seek total return through a combination of income and capital appreciation. The plan is to invest, both long and short, in a wide variety of global credit instruments without constraints to particular benchmarks, asset classes, or sectors. The fund will be managed by Saurabh Sud. Its opening expense ratio is 0.81%, and the minimum initial investment will be $2,500.
WisdomTree International PutWrite Strategy Fund
WisdomTree International PutWrite Strategy Fund , an actively-managed ETF, seeks long-term growth of capital and income generation. The plan is to sell “listed put options on one or more ETFs that track the performance of developed markets outside of the U.S. and Canada. The Fund attempts to generate returns through the receipt of option premiums from selling International ETF Puts, while investing the sales proceeds in U.S. Treasury Bills of varying maturities.” The fund will be managed by a person or persons as yet unnamed. Likewise its opening expense ratio has not been released. WisdomTree is simultaneously launching similar PutWrite funds focusing on emerging markets, long-term Treasuries, and high-yield corporate bonds.
