The Securities and Exchange Commission, by law, gets between 60 and 75 days to review proposed new funds before they can be offered for sale to the public. Each month, Funds in Registration gives you a peek into the new product pipeline. Most funds currently in registration are in a scramble to launch by June 30th with the hope that having a “standard reporting period” to share with investors sooner.
Every month the ETF industry breathlessly trots out a few ideas designed to seize the moment. They’re the sort of products that Ron Popeil would have launched if only the SEC hadn’t obstructed “as seen on TV” ETFmercials. Sadly, not every launch can be a Mr. Microphone, a Chop-o-matic, Veg-o-matic, or even a Slice-o-matic. Many turn out to be just Inside-the-Shell Egg Scramblers. We chronicle flameouts each month, whether through simple liquidation (The Obesity ETF and The Health and Fitness ETF) or transmutation from one o-matic to another (as when the Drone Economy Strategy ETF became the Global Cloud ETF).
Last month, it was the “Flight to Safety” ETF. This month brings the Work from Home ETF (feh … not a sangria stock in sight), the Esports and Digital Entertainment ETF, and the BioThreat ETF.
Eventide Exponential Technologies Fund
Eventide Exponential Technologies Fund will seek long-term capital appreciation. The plan is to invest in tech companies, particularly those poised to enjoy long-term exponential growth (though the prospectus quickly allows that the fund itself will not provide exponential returns). The fund will be managed by Anant Goel, a research analyst at Eventide. Its opening expense ratio for “N” shares is 1.63%, and the minimum initial investment will be $1,000.
First Trust Alternative Strategic Focus ETF
First Trust Alternative Strategic Focus ETF, an actively-managed ETF, seeks long term total return. The plan is to invest in a bunch of “alternative asset” categories using some combination of ETFs, ETNs, “funds backed by physical commodities or currencies,” futures, options contracts, and Treasuries. The fund will be managed by John Gambla and Rob A. Guttschow. Its opening expense ratio has not been disclosed.
Goldman Sachs Defensive Equity Fund
Goldman Sachs Defensive Equity Fund will seek long-term growth of capital with lower volatility than equity markets. The plan is to use a “variety of quantitative techniques, in combination with a qualitative overlay, when selecting investments.” The short version is that it’s a large cap equity fund with an options overlay. The fund will be managed by Federico Gilly and Matthew Schwab. Its opening expense ratio has not been disclosed, and the minimum initial investment for “A” shares will be $1,000.
Inspire Tactical Large Cap ESG ETF
Inspire Tactical Large Cap ESG ETF, an actively-managed ETF, seeks capital appreciation with below-market volatility. The plan is to invest in “the most inspiring, biblically aligned companies in the world.” The fund will be managed by a team from CWM Advisors. Its opening expense ratio is 0.84%, though the figure is placed in brackets which might mean that it’s tentative.
Janus Henderson Global Sustainable Equity Fund
Janus Henderson Global Sustainable Equity Fund will seek long-term growth of capital. The plan is to invest in 50-75 companies whose products and services are considered by the portfolio managers as contributing to positive environmental or social change and sustainable economic development. The fund will be managed by Hamish Chamberlayne and Aaron Scully. Its opening expense ratio has not been disclosed, and the minimum initial investment for “N” shares will be $2,500.
JPMorgan SmartSpending 2020 Fund
JPMorgan SmartSpendingSM 2020 Fund will seek total return. It’s a halfway interesting fund, akin to the late and unlamented Vanguard Managed Payout Fund. The strategy is to provide retirement income with the expectation that investors will systematically draw down their accounts between now and 2055. The portfolio will be 20-50% global equities, 50-70% global fixed income, 0-20% alts and 0-20% cash. It’s not a target-date fund, in the sense that there is no predetermined asset allocation glide path. The fund will be managed by Daniel Oldroyd, Silvia Trillo, and Katherine Santiago. Its opening expense ratio has not been disclosed, and the minimum initial investment for “A” shares will be $1000. That’s an odd amount since the prospectus is clear: this is not intended for investors in the “accumulation” phase, it’s intended for those in the “distribution” phase. Hmmm … not sure how well $1000 will stretch to 2055
Lazard US Sustainable Equity Portfolio
Lazard US Sustainable Equity Portfolio will seek long-term capital appreciation. The plan is to invest in US stocks with a capitalization of $1 billion or more. Which stocks, you ask? So far as I can tell, they’re ones that grow earnings longer and faster than the market expects. They then screen for firms whose human capital and natural capital principles might help sustain the firms in a changing world. The fund will be managed by a five-person team from Lazard. Its opening expense ratio has not been disclosed, and the minimum initial investment for “Open” shares will be $2500.
MFS International Large Cap Value Fund
MFS International Large Cap Value Fund will seek capital appreciation. The plan is undervalued large cap stocks. Really, they say virtually nothing else about their plans. The fund will be managed by Steven Gorham and David Shindler. Mr. Gorham had previously co-managed the $50 billion MFS Value Fund and several funds for European investors. Its opening expense ratio has not been disclosed, and the minimum initial investment for “A” shares will be $1,000, reduced to $250 for IRAs, and zero for accounts set up with an automatic investing plan.
Mondrian Global Equity Value Fund
Mondrian Global Equity Value Fund will seek long-term total return. The plan is to build a non-diversified value portfolio using fundamental, stock-by-stock analysis. The fund will be managed by Aileen Gan, CIO, James Francken, and Charlie Hill. Its opening expense ratio is 0.74%, and the minimum initial investment will be $50,000.
Principal Spectrum Qualified Dividend Active ETF
Principal Spectrum Qualified Dividend Active ETF, an actively-managed ETF, seeks current income. The plan is to preferred and convertible shares (including the lovely contingent convertible securities (“Cocos”). The managers will consider both investment-grade and high-yield securities. The fund will be managed by a large-ish team from Principal. Its opening expense ratio is 0.60%.
Schwab High Yield Municipal Bond Fund
Schwab High Yield Municipal Bond Fund will seek tax-free income. The plan is to buy munis “with remaining maturities of 5-30 years.” There’s also the prospect of some taxable bonds, some illiquid securities derivatives, futures contracts, and securities subject to the AMT. The fund will be managed by Jason D. Diefenthaler and Kenneth Salinger. This is the reincarnation of some earlier (“predecessor”) fund, but there’s no note about whether these are the predecessor’s managers, what fund it was, or how it did. Its opening expense ratio has not been disclosed, and the minimum initial investment will be zero.
Sterling Capital Focus Equity ETF
Sterling Capital Focus Equity ETF [LCG], an actively-managed ETF, seeks long-term capital appreciation. The plan is to beat the Russell 1000 Growth Index with a portfolio of 15-30 growth stocks. The fund will be managed by Colin R. Ducharme. Its opening expense ratio is 0.59%, though the figure is placed in brackets which might mean that it’s tentative.
WCM Focused International Value Fund
WCM Focused International Value Fund will seek long-term capital appreciation. The plan is to build a portfolio around undervalued large capitalization, established, multinational companies. Those might be located in developed or developing markets. The fund will be managed by Andrew Wiechert. Mr. Wiechert currently manages $6 million in three separate accounts using the same discipline. Its opening expense ratio is 1.50%, and the minimum initial investment will be $1000, reduced to $100 for accounts opened with an automatic investing plan.
