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 we survey actively managed funds and ETFs in the pipeline. This month brings 34 new products in the pipeline, most of which will launch by the end of June. The recent record, though, is that many authorized products are being withheld from the market; that is, there are funds that advisers could launch but haven’t chosen to. It might be a sign of market anxiety.
A number of this month’s offerings continue the theme of latching lamprey-like onto the market’s passions of the moment; that would include SPACs, crypto-currency, untested green tech, and so on. That said, there’s some real substance and some intriguing ideas in the mix.
Rajiv Jain’s GQG (Global Quality Growth) firm is launching three new funds, that marry quality + dividends in the US, international and global funds.
One is a vehicle for the former managers of Royce Opportunity Fund which migrated, wholesale, to First Eagle.
Two are either extensions (BlackRock Mid-Cap Growth begets BlackRock SMID-Cap Growth) or possible clones (Ivy Pzena International Value begets Pzena International Value?).
Four (ALPS Hillman and American Century) are newly minted ETFs that replicate successful, actively managed funds. Another (Schwab Ariel ESG ETF) sort of clones another Ariel strategy.
Finally Penserra Capital launches a series of simple, goal-centered (saving for a mortgage payment) active ETFs.
Overall, 10 of the 34 funds have an explicit ESG mandate or sustainability focus. Some, even, legitimately. There’s a surprising lot of thoughtful ideas this month. They bear rather more attention than usual.
Alexis Practical Tactical ETF
Alexis Practical Tactical ETF, an actively managed ETF, will primarily seek capital appreciation, with some interest in income and capital preservation. It’s your basic “we can go anywhere and do anything because we’ve got a computer” fund. The fund will be managed by Jason Browne and Alexis Browne of Alexis Investment Partners. The Brownes are former FundX executives. Its opening expense ratio has not been released.
ALPS Hillman Active Value ETF
ALPS Hillman Active Value ETF, an actively managed ETF, seeks long-term total return from a combination of income and capital gains. The plan is to invest in around 45 companies that have competitive advantages but whose shares have fallen out of favor. The fund will be managed by Mark A Hillman. This appears to be the ETF version of Mr. Hillman’s five-star Hillman Value Fund (HCMAX). Its opening expense ratio has not been disclosed.
American Century Emerging Markets Bond ETF
American Century Emerging Markets Bond ETF, an actively managed, non-transparent ETF, seeks current income and capital appreciation. The plan is to invest in EM sovereign, quasi-sovereign, and corporate debt. The fund will be managed by a team headed by Jon Lovito. Most of the team also co-manages the three-star American Century Emerging Markets Debt Fund (AEDQX) which charges 1.23% (and which the managers decline to invest in). Its opening expense ratio has not been disclosed. This filing appears in the same prospectus with Multisector Income and Sustainable Equity, so you’ll have to search down a bit for it.
American Century Sustainable Growth ETF
American Century Sustainable Growth ETF, an actively managed, non-transparent (or “ANT”) ETF, seeks capital appreciation. The plan is to invest in large-cap companies that show sustainable business improvement using a proprietary model that combines fundamental measures of a stock’s growth and value potential with ESG metrics. The fund will be managed by a team headed by Joseph Reiland. This is the team’s first fund; it appears that they’re mostly equity analysts for AC. Its opening expense ratio has not been disclosed. This fund sits at the bottom of the prospectus it shares with EM Bond and Multisector Income, so you’ll have to scroll down.
American Century Multisector Income ETF
American Century Multisector Income ETF, an actively managed, non-transparent ETF, seeks a high level of current income and total return. The plan is to rotate through corporate bonds and notes (including high-yield bonds), government securities, securitized credit instruments, and emerging markets debt securities in pursuit of the best risk-adjusted returns. The fund will be managed by Charles Tan, Jason Greenblath, and Jeffrey Houston. The team also helps manage the four-star American Century Strategic Income Fund (ASIEX) although none of them have chosen to invest in it. Its opening expense ratio has not been disclosed.
Baillie Gifford China Equities Fund
Baillie Gifford China Equities Fund will seek capital appreciation. The plan is to use bottom-up research to identify 40-80 growth companies in China. The fund will be managed by Sophie Earnshaw, Mike Gush, and Roderick Snell. Its opening expense ratio has not been released, and the minimum initial investment will be … well, $10 million.
BBH Partner Fund – Small Cap Equity Fund
BBH Partner Fund – Small Cap Equity Fund will seek to provide investors with long-term growth of capital. The plan is to find “qualitatively excellent” companies and invest in ones that pass valuation and ESG screens. The fund will be managed by Bares Capital Management whose founder wrote The Small-Cap Advantage (2011). Mr. Bares does not describe his work as a best-seller, but it does land 2500 spots ahead of the other “best-selling” investing book mentioned this month. Its opening expense ratio is 0.95%, and the minimum initial investment will be $10,000.
BlackRock Future Climate and Sustainable Economy ETF
BlackRock Future Climate and Sustainable Economy ETF, an actively managed ETF, seeks to maximize total return by investing in companies that are furthering the transition to a lower-carbon economy. More broadly, it avoids traditional “guns and sins” stocks. The managers have the authority to move if market conditions oblige them to. The fund will be managed by Alastair Bishop, Sumana Manohar, and Tom Holl. The team primarily manages money for BlackRock’s European clients. Its opening expense ratio has not been disclosed.
BlackRock SMID-Cap Growth Equity Fund
BlackRock SMID-Cap Growth Equity Fund will seek long-term capital appreciation. The very vanilla plan is to buy domestic SMID-cap stocks with above-average earnings potential (really, very few funds express a desire to invest in firms with below-average earnings potential). The managers have the option to hedge the portfolio. The fund will be managed by Phil Ruvinsky and William Broadbent. Mr. Ruvinsky co-manages the five-star Mid-Cap Growth Equity Fund. They jointly manage the new BlackRock Future Innovators ETF (BFTR) which has had a good early run. Its opening expense ratio has not been disclosed, and the minimum initial investment for “A” sales will be $1,000.
CG Hydrogen Age ETF
CG Hydrogen Age ETF, an actively managed ETF, seeks long-term growth of capital. The plan is to invest in companies that make products and offer services specifically related to hydrogen adoption, and companies that implement hydrogen solutions as part of their existing operations in the pursuit of decarbonization objectives and corporate growth. Because the US is lagging in hydrogen adoption, the fund will invest primarily overseas at the outset. The fund will be managed by Roger Mortimer of Pacific Green Hydrogen LLC. Its opening expense ratio remains hidden.
Cowen SPAC ETF
Cowen SPAC ETF, an actively managed ETF, seeks capital appreciation. The plan is to buy spiffy SPACs, those with “management skill.” The fund will be managed by Jonathan Molchan of Cowen Prime Advisors. Its opening expense ratio has not been disclosed.
First Eagle Small Cap Opportunity Fund
First Eagle Small Cap Opportunity Fund will seek long-term growth of capital. The plan is to target company turnarounds, emerging growth companies with interrupted earnings patterns, companies with unrecognized asset values, or undervalued growth companies. The fund will be managed by William A. Hench, Robert Kosowsky, and Suzanne Franks. Up until April 20, 2021, the team was managing the four-star Royce Opportunity Fund (RYOFX). In the past five years, the strategy has had top 1% returns; in the preceding five, there was more of a feast-or-famine pattern. Morningstar describes the departure as “a stunning management team departure” which left their former fund and its investors “in the lurch.” Royce appointed Mr. Hench’s 76-year-old mentor to lead an interim management team. The new fund’s opening expense ratio for “A” shares is 1.25%, and the minimum initial investment will be $2,500.
Goldman Sachs Future Consumer Equity ETF
Goldman Sachs Future Consumer Equity ETF, an actively managed ETF, seeks long-term growth of capital. The plan is to invest in all of those companies tied to your modern lifestyle. (If you want to have an investment in “experiences” or “luxury,” this is your go-to option.) The fund will be managed by a Goldman Sachs team headed by Alexis Deladerrière. Its opening expense ratio has not been divulged.
Goldman Sachs Future Health Care Equity ETF
Goldman Sachs Future Health Care Equity ETF, an actively managed ETF, seeks long-term growth of capital. The plan is to invest in US and non-US companies that specialize in genomics, precision medicine, robotic surgery, telemedicine, and so on. The fund will be managed by a Goldman Sachs team headed by Jenny Chang. Its opening expense ratio has not been disclosed.
GQG Partners International Quality Dividend Income Fund
GQG Partners International Quality Dividend Income Fund will seek long-term capital appreciation and dividend income. The plan is to invest primarily in dividend-paying securities of U.S. and non-U.S. companies, including those in the emerging markets, which qualify as “quality growth” names. It’s a style for which the lead manager is famous, and with which he’s been famously successful. The fund will be managed by Rajiv Jain and Brian Kersmanc. Its opening expense ratio is 1.04%, and the minimum initial investment will be $2,500. The same prospectus announced the US and Global versions of the same strategy with those funds led by Mr. Jain and James Anders.
John Hancock Global Environmental Opportunities Fund
John Hancock Global Environmental Opportunities Fund will seek growth through capital appreciation. The plan is to invest in companies with products or services that seek to have a positive environmental impact. The prospectus specifies the characteristics of a corporation that attracts them (a small environmental footprint plus the prospect of a positive environmental impact) but doesn’t say anything about the financial characteristics of the stocks that attract them. The fund will be managed by Luciano Diana, Yi Du, and Gabriel Micheli of Pictet Asset Management. Pictet has been around since 1805 and manages about $250 billion in assets. Its opening expense ratio on “A” shares is 1.20%, and the minimum initial investment will be $1,000.
LeaderShares Defensive Yield ETF
LeaderShares Defensive Yield ETF, an actively managed ETF, seeks current income. It will operate as an unconstrained bond fund, buying whatever calls and retreating to cash if things get bad enough. The fund will be managed by Michael T. Messinger and Michael T. Cheung of Redwood Investment Management. Its opening expense ratio has not been disclosed.
LifeGoal Home Savings ETF
LifeGoal Home Savings ETF (HOM), an actively managed ETF, seeks to provide current income and some capital appreciation. The plan is to help people save for predictable home-related expenses (mortgage down payments, home repairs, rent) by investing 50-95% of the portfolio in fixed-income, 5-35% in equity, and 0-15% in commodities. The manager can invest directly in assets or indirectly through ETFs. The fund will be managed by Brett Sohns of Penserra Capital Management. Its opening expense ratio is 0.39%. I’m grateful for the disclosure since (a) it’s vital to an ETF’s prospects and (b) virtually every other filing this month chose not to commit to an expense ratio. The same prospectus covers filings for Vacation Savings, Children Savings, General Savings, and Wealth Building ETFs.
Lord Abbett International Growth Fund
Lord Abbett International Growth Fund will seek long-term capital appreciation. The plan is to invest in mid- to large-cap international growth stocks. Not much detail beyond that. The fund will be managed by Matthias A. Knerr and Sue Kim. Its opening expense ratio varies dramatically across the fund’s 10 (!) share classes, from 0.73% to 1.81%. The minimum initial investment will be $1,500 for investor-level funds.
Pzena International Value Fund
Pzena International Value Fund will seek long-term capital appreciation. The plan is to follow a “classic value strategy” in selected 60-80 developed market stocks. An ESG screen is included in their fundamental analysis of each firm. The fund will be managed by Caroline Cai, John Goetz, and Allison Fisch. There’s already a four-star, quarter-billion-dollar Ivy Pzena International Value Fund (ICVIX) run by the same team since 2018. The “A” shares of the Ivy version are substantially more expensive. I have no clue about the relationship between the two funds. Its opening expense ratio is 1.10%, and the minimum initial investment will be $5,000 for regular accounts and $1,000 for retirement accounts.
Regnan Global Equity Impact Solutions
Regnan Global Equity Impact Solutions will seek long-term capital appreciation by investing in companies that contribute solutions to addressing the world’s major social and environmental challenges. The plan is to invest in a global portfolio of 25-50 companies that have the potential to drive a positive impact in the future. The fund will be managed by Tim Crockford and Mohsin Ahmad. Regnan is an Australian firm that specializes in impact investing; it shares a parent company of JOHCM. Its opening expense ratio has not been disclosed, and the minimum initial investment for Investor shares will be zero.
Robinson Active Premerger SPAC ETF
Robinson Active Premerger SPAC ETF, an actively managed ETF, seeks total return while minimizing downside risk. The plan is to entrust money to the best SPAC managers they can identify. The fund will be managed by a team from Robinson Capital Management managed by James Robinson. Mr. Robinson was previously president of the Munder Funds. Its opening expense ratio has not been disclosed.
Schwab Ariel ESG ETF
Schwab Ariel ESG ETF (SAEF), an actively managed ETF, seeks long-term capital appreciation. The plan is to invest primarily in small- to mid-cap ESG stocked stocks, though they may move to cash. In a singularly odd proviso, Schwab retains the right to invest part of the portfolio, potentially in non-ESG securities, “depending on market conditions.” The fund will be managed by John Rogers and Kenneth Kuhrt. Its opening expense ratio has not been disclosed.
Sparkline Intangible Value ETF
Sparkline Intangible Value ETF, an actively managed ETF, seeks long-term capital appreciation. The plan is to invest in US firms that have substantial intrinsic value based on their possession of intangible assets such as human capital, brand equity, intellectual property, and network efforts. Generally around 50 securities, generally overweight in tech and telecom. The fund will be managed by Kai Wu of Sparkline Capital and Brandon Koepke of Empowered Funds. It appears that Mr. Wu, who has managed a hedge fund and worked at GMO, is the brains of the outfit and Mr. Koepke provides for the execution. Its opening expense ratio has not been shared.
Turner Quant Advantage ETF
Turner Quant Advantage ETF, an actively managed ETF, seeks to grow and protect capital. The plan is to invest in up-trending stocks when times are good and inverse ETFs when the market is falling. The fund will be managed by Michael Turner of Turner Capital Investments. Its opening expense ratio has not been disclosed.
VanEck Environmental Sustainability Fund
VanEck Environmental Sustainability Fund will seek long-term capital appreciation by investing primarily in equity securities of companies operating in environmental sustainability markets. The plan is to create a global portfolio of securities issued by firms in sectors such as renewable energy, smart resource management, agritech, recycling, water, and advanced materials. The fund will be managed by Shawn Reynolds and Veronica Zhang. Its opening expense ratio has not been disclosed, and the minimum initial investment will be $1,000 for “A” and “Y” shares.
Viridi ESG Crypto Mining ETF
Viridi ESG Crypto Mining ETF, an actively managed ETF, seeks capital appreciation. The plan is to invest in 15-30 stocks in the crypto ecosystem but not in cryptocurrencies themselves. There’s also an ESG screen, arguably akin to an ESG-screen in a coal mining ETF. The fund will be managed by Wes Fulford of New Gen Minting. Its opening expense ratio has not been disclosed.
ZEGA Buy & Hedge ETF
ZEGA Buy & Hedge ETF, an actively managed ETF, seeks long-term capital appreciation while mitigating overall market risk. It’s a pretty typical options-based strategy: options on the S&P 500 plus a fixed-income portfolio to generate some income. Its main distinction is specifying its downside trigger: the fund seeks to limit losses when the S&P 500 declines by more than 8%-10%. The fund will be managed by Mick Brokaw and Jay Pestrichelli of ZEGA Financial. Mr. Pestrichelli has written a book, declared to be a best-seller, entitled Buy & Hedge: The Five Iron Rules for Investing Over the Long Term (2011). Amazon places it at #2,159,158 overall and #5,426 among introductions to investing but I guess it does say “Best Sellers Rank” before the particular stats. Its opening expense ratio has not been disclosed.
