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 50 new products in the pipeline, most of which will launch by the end of October. 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.
It’s raining bitcoin funds. Filings this month for bitcoin or crypto funds come from AdviserOne, Galaxy, GlobalX, IDX (bitcoin), IDX (Ethereum), Invesco, ProShares (for bitcoin), ProShares (for ether), Valkyrie, Valkyrie again (miners), and VanEck. My bias here is clear: almost no one has the ability to use bitcoin well enough to warrant the warrant. In theory, bitcoin would raise the returns of an all-equity portfolio … but would increase its volatility, even more, resulting in a lower Sharpe ratio for everything from a 1% to a 10% bitcoin stake. (All of that from Amy Arnott’s fine analysis, Does Your Portfolio Need Bitcoin?, at Morningstar.com.) The underlying problem is that bitcoin is 10 – 20x more volatile than the stock market and relatively few of us would stick patiently through an 82% market decline – the max drawdown for bitcoin over the past decade – and think, “Wowza! It’s a sale! Let’s buy more!” A few active managers, such as the guys at Appleseed Fund, hold tiny slices of bitcoin because of its diversifying value and the parlous state of the fixed-income market. I suppose that if I wanted a bit of cryptocurrency, I’d move in that direction.
AdvisorShares Poseidon Dynamic Cannabis ETF
AdvisorShares Poseidon Dynamic Cannabis ETF, an actively managed ETF, seeks long-term capital appreciation. The plan is to invest, directly and through total return swaps, in “marijuana and hemp business or firms providing services, products or technology to the marijuana and hemp business.” At least 25% will be invested in biotechs. The fund will be managed by Emily Paxhia, Morgan Paxhia, and Tyler Greif. Its opening expense ratio has not been disclosed.
Advocate Rising Rate Hedge ETF
Advocate Rising Rate Hedge ETF, an actively managed ETF, seeks to generate positive returns in periods of rising interest rates. The plan is to buy some combination of Treasuries and long and short derivatives on a whole bunch of stuff. The fund will be managed by Scott Peng. Dr. Peng has a Ph.D. in Applied Plasma Physics from MIT and a B.S. in Nuclear Engineering from Texas A&M. Its opening expense ratio is 0.85%.
Alpha Intelligent – Large Cap Value ETF
Alpha Intelligent – Large Cap Value ETF, an actively managed ETF, seeks total return. Apparently, it will be a fund-of-funds whose success is driven by “investment expertise with big data analytics and powerful machine learning.” Whoa! Big and powerful! The fund will be managed by John L. Sabre and Greg D. Anderson of Princeton Fund Advisors. Its opening expense ratio is 0.85%. The same prospectus announces growth and value ETFs for large, mid and small cap stocks.
Ambassador Fund
Ambassador Fund will seek current income. The plan is to invest primarily in “catastrophe” or “cat” bonds and special purpose vehicles tied to the reinsurance industry. At the moment, the adviser, portfolio managers, expense ratio, and minimum investment are all unnamed.
American Century Select High Yield ETF
American Century Select High Yield ETF, an actively managed ETF, seeks high current income. The plan is to invest in medium- to long-term high-yield bonds. The fund will be managed by a team led by David Crall. The same team manages the $1.1 billion, four-star American Century High Income fund. Its opening expense ratio has not been disclosed.
BlackRock Sustainable U.S. Growth Equity Fund
BlackRock Sustainable U.S. Growth Equity Fund will seek to maximize total return. The plan is to start with ESG screens and then build the portfolio based on strength of earnings, quality of balance sheet, cash flow trends, and relative valuation. The fund will be managed by Lawrence Kemp and Sam Console. Its opening expense ratio has not been disclosed, and the minimum initial investment will be $1,000 for “A” shares.
Build Bond Innovation ETF
Build Bond Innovation ETF, an actively managed ETF, seeks capital appreciation and risk mitigation. The plan doesn’t strike me as terribly innovative: it’s a fixed-income portfolio and S&P 500 options. The fund will be managed by Matthew Dines and Dustin Qualley. Its opening expense ratio has not been disclosed.
Capital Group International Focus Equity ETF
Capital Group International Focus Equity ETF, an actively managed ETF, seeks long-term growth of capital. The plan is to invest in attractively valued non-US companies that represent good, long-term investment opportunities. The fund will be managed by Sung Lee, Renaud Samyn, Nicholas Grace, Jesper Lyckeus, and Christopher Thomsen. The key attraction is that Capital Group is a part of the $2.5 trillion dollar complex that manages the American Funds. The “Capital System” is to use multiple managers but to give each manager a slice of the portfolio to run. Its opening expense ratio has not been disclosed. The advisor simultaneously filed a prospectus for Core Equity, Core Plus Income, Dividend Value, Global Growth, and Growth ETFs.
Federated Hermes Short-Term Corporate ETF
Federated Hermes Short-Term Corporate ETF, an actively managed ETF, seeks current income. The plan is to invest primarily in a diversified portfolio of investment-grade, fixed-income securities consisting primarily of corporate debt securities with a portfolio duration of 1.5 – 3.5 years. The fund will be managed by John Gentry and Robert Matthews. Its opening expense ratio is 0.29%.
Genuine Investors ETF
Genuine Investors ETF, an actively managed ETF, seeks attractive long-term risk-adjusted returns. The plan is to build a 20-30 name all-cap stock portfolio but thinking like genuine investors. That translates to thinking like a business owner, not a trader. The fund will be managed by Guy Davis of GCI Investors. He’s been running separate accounts using this approach since 2017 but the performance information is blank in the prospectus. Its opening expense ratio has not been disclosed.
Guru Favorite Stocks ETF
Guru Favorite Stocks ETF, an actively managed ETF, seeks long-term capital appreciation. The plan is to invest in high quality companies that are favored by prominent long-term investors (“Gurus”) and at reasonable prices. The fund will be managed by Cechan Tian, founder of Guru Focus Investments (see GuruFocus.com), and Brandon Koepke. Its opening expense ratio is 0.65%.
Hartford Schroders Sustainable Core Bond Fund
Hartford Schroders Sustainable Core Bond Fund seeks long-term total return consistent with the preservation of capital. The plan is to identify sustainable issuers and, from their securities, build an unconstrained bond portfolio. It can buy bonds of any duration but the overall portfolio will stick close to the BarCap Aggregate. This is the relaunch of the former Schroder Core Bond Fund. The fund will be managed by a team led by Lisa Hornby. Its opening expense ratio ranges from 0.32 – 1.06% depending on which (idiosyncratic) share class you buy. The minimum initial investment in “I” shares is $2,000.
Hood River International Opportunity Fund
Hood River International Opportunity Fund will seek superior long-term growth of capital. The plan is to invest in the stocks of 80-85 small-capitalization companies that are located in non-U.S. developed or emerging markets countries. For them, small caps are under $5 billion. The fund will be managed by a team led by Brian P. Smoluch. Its opening expense ratio has not been disclosed, and the minimum initial investment will be $25,000. The prospectus also covers an Investor share class, but that’s not being launched just yet.
JPMorgan Climate Change Solutions ETF
JPMorgan Climate Change Solutions ETF, an actively managed ETF, seeks to achieve “a return.” “A return,” guys? Really? The plan is to invest in companies that are helping address climate change. The fund will be managed by Yazann Romahi, Francesco Conte, and Sara Bellenda. Its opening expense ratio has not been disclosed.
JPMorgan Inflation Managed Bond ETF
JPMorgan Inflation Managed Bond ETF, an actively managed ETF, seeks to maximize inflation-protected total return. The plan is to combine a diversified fixed income portfolio with inflation hedging derivatives. The key is that these are not inflation-protected securities per se, they are attractive securities with an inflation-protection overlap. It appears that this ETF will be a converted mutual fund already in operation but the prospectus leaves blank spaces for all of that fund’s information. The fund will be managed by Scott E. Grimshaw, Steven Lear, and David Rooney. Its opening expense ratio will be 0.25%.
Kingsbarn Tactical Bond ETF
Kingsbarn Tactical Bond ETF, an actively managed ETF, seeks to maximize total return. The plan is to buy fixed-income investments ETFs and hedge the portfolio with futures contracts on 10-year U.S. Treasury notes. The fund will be managed by Steven Todd Ruoff and Stephen Haley Scott. The prospectus is blank on the question of their qualifications. Its opening expense ratio has not been disclosed.
Lazard US Systematic Small Cap Equity Portfolio
Lazard US Systematic Small Cap Equity Portfolio will seek long-term capital appreciation. The portfolio construction “combines fundamental and quantitative techniques into a fully systematic process” to generate a portfolio of 300-500 small cap stocks. Yikes. For them, “small cap” means anything up to $19 billion in market cap. Yikes. The fund will be managed by Oren Shiran, Philip N. Summe, and Stefan T. Tang. The team comes from the hedge fund firm Baylight Capital. Its opening expense ratio has not been disclosed, and the minimum initial investment will be $2,500.
Levo Fund I
Levo Fund I will seek total return from income and capital appreciation. The plan is to invest in a global mix of stocks, bonds, gold, and real estate with a bias toward the US and bonds. It’s a sort of “permanent portfolio” strategy that mixes uncorrelated assets each of which thrives in different market conditions; the adviser targets “a 3-5% annual return after fees with a portfolio return standard deviation of under 10%.” The fund will be managed by Dillon T. Martin who earned his BA at the U of Tennessee in 2017 and has had short stints with Merrill Lynch and a software company. Its opening expense ratio and minimum initial investment have not been disclosed.
Lord Abbett Emerging Markets Equity Fund
Lord Abbett Emerging Markets Equity Fund will seek long-term capital appreciation. The plan is to do pretty undistinguished things (growth and value stocks that are worth more than they’re selling for), with the proviso that they might hedge the portfolio. The fund will be managed by Sue Kim. Its opening expense ratio is 1.24%, and the minimum initial investment will be $1,500.
Oakmark Small Cap Fund
Oakmark Small Cap Fund will seek long-term capital appreciation. The plan is to try again to apply Oakmark’s “intrinsic value” discipline to the mid-cap space (the cap is $28.44 billion) and call it a small cap strategy. Oakmark’s last version of Oakmark Small Cap (1995- 2004) was managed for a while by our colleague Ed Studzinski and James Benson. This time the fund will be managed by long-time Oakmark analysts Thomas W. Murray and Robert F. Bierig. Its opening expense ratio is 1.28%, and the minimum initial investment will be $1,000.
OneAscent Large Cap Core ETF
OneAscent Large Cap Core ETF, an actively managed ETF, seeks capital appreciation. The plan is to construct the portfolio around a two-step screening process: (1) eliminate problematic companies such as those involved in abortion, addictive products, or human rights violations then (2) seek to invest in companies that “promote flourishing for their stakeholders.” The fund will be managed by Cole Pearson and Nathan Willis. Mr. Pearson was part of the successful Eventide team and Mr. Willis managed a family office. Both are, they report, Presbyterian. Its opening expense ratio is 0.76%.
RBC BlueBay Core Plus Bond Fund
RBC BlueBay Core Plus Bond Fund seeks total return. The plan is to build a (possibly) global ESG-screened intermediate bond portfolio. Mostly investment grade, with up to 20% high yield. The fund will be managed by a puzzling three-person team. All of the managers are from RBC even though Blue Bay is listed as the sub-advisor. Its opening expense ratio and investment minimums have not been disclosed.
RBC BlueBay Strategic Income Fund
RBC BlueBay Strategic Income Fund will seek total return. The plan is to build a (possibly) global ESG-screened unconstrained bond portfolio. Mostly domestic investment grade, with up to 30% high yield. The fund will be managed by a puzzling three-person team. All of the managers are from RBC even though Blue Bay is listed as the sub-advisor. Its opening expense ratio and investment minimums have not been disclosed.
Regents Park S&P 500 Hedged ETF
Regents Park S&P 500 Hedged ETF, an actively managed ETF, seeks capital appreciation through hedged exposure to the S&P 500. The plan is to own fixed-income securities plus FLEX Options and standard call options on the S&P 500 Index. The manager believes that the FLEX Options gives him a structural advantage of strategies relying on standard call options. He might well be right but the intricacies of the options market are beyond my poor understanding. The fund will be managed by Darren Leavitt. Its opening expense ratio has not been disclosed.
ROBO Global Covered Call and Growth ETF
ROBO Global Covered Call and Growth ETF, an actively managed ETF, seeks growth and income. The plan is to buy “disruptive technology companies” then try to hedge up to 75% of the portfolio with covered calls. The fund will be managed by William Studebaker. Its opening expense ratio has not been disclosed.
Roundhill Cannabis ETF
Roundhill Cannabis ETF, an actively managed ETF, seeks capital growth. The plan is to invest, directly and through total return swaps, in “the cannabis and hemp ecosystem.” There are already nine ETFs in the space and their records (the largest ETF is down nearly 10% YTD) might give investors pause. The fund will be managed by a seven-person team from both Roundhill Financial (the advisor) and Exchange Traded Concepts (the sub). Its opening expense ratio has not been disclosed.
Simplify Hedged Equity ETF
Simplify Hedged Equity ETF, an actively managed ETF, seeks capital appreciation. The plan is to buy S&P 500 ETFs and add an option overlay known as a “put/spread collar” strategy. The fund will be managed by Paul Kim, David Berns, and Michael Green of Simplify Asset Management. Its opening expense ratio is 0.53%.
SPDR Nuveen Municipal Bond ESG ETF
SPDR Nuveen Municipal Bond ESG ETF, an actively managed ETF, seeks current income. The plan is to build an ESG-screened, intermediate-term muni portfolio. The fund will be managed by Timothy T. Ryan and Shawn O’Leary of Nuveen. Its opening expense ratio has not been disclosed.
TSW Emerging Markets Fund
TSW Emerging Markets Fund will seek long-term capital appreciation. The plan is to use a “bottom-up, business-focused approach based on careful study of individual companies and their competitive dynamics” to construct a value-oriented portfolio of 40-80 names. The fund will be managed by Elliott W. Jones and C. William Halladay of Thompson, Siegel & Walmsley LLC. Its opening expense ratio has not been disclosed, and the minimum initial investment will be zero unless it’s imposed by the intermediary platform (e.g. Schwab) that you use.
TSW High Yield Bond Fund
TSW High Yield Bond Fund will seek high current income. The plan is to deploy a “disciplined, bottom-up research process in order to identify securities showing stable or improving credit metrics and offering strong relative value.” The fund will be managed by William M. Bellamy of Thompson, Siegel & Walmsley LLC. Its opening expense ratio is, and the minimum initial investment will be.
TSW Large Cap Value Fund
TSW Large Cap Value Fund will seek maximum long-term total return, consistent with reasonable risk to principal, by investing in a diversified portfolio of common stocks of relatively large companies. . The plan is to use a “bottom-up, business-focused approach based on careful study of individual companies and their competitive dynamics” to construct a value-oriented portfolio of 30-70 names. This represents the conversion of an unnamed predecessor fund that has modestly trailed its benchmark over the past decade. I’m guessing it’s TS&W Equity. The fund will be managed by Brett P. Hawkins and Bryan F. Durand. Its opening expense ratio is, and the minimum initial investment will be.
Vanguard Core-Plus Bond Fund
Vanguard Core-Plus Bond Fund will seek total return while generating a moderate to high level of current income. The plan is to buy … well, bonds of various maturities, yields and qualities. That might include EM bonds. The fund will be managed by a team led by Michael Chang. Its opening expense ratio is 0.30%, and the minimum initial investment will be $3,000.
Vanguard Multi-Sector Income Bond Fund
Vanguard Multi-Sector Income Bond Fund will seek total return while generating a moderate to high level of current income. The plan is to buy a mix of fixed income securities that are high-quality, medium-quality, and lower quality bonds including government, corporate, and EM. The fund will be managed by Michael Chang, Arvind Narayanan, and Daniel Shaykevich. Its opening expense ratio is 0.40%, and the minimum initial investment will be $3,000.
Wahed Dow Jones Islamic World ETF
Wahed Dow Jones Islamic World ETF, an actively managed ETF, seeks long-term capital appreciation. The plan is to build a global portfolio of ESG-screened, Shariah-compliant companies. The “Shariah-compliant” piece means that they’ll avoid both banks and debt-ridden firms, as well as those involved in a handful of specific areas (pork, porn, gambling, alcohol, tobacco, and armaments production). While the fund is actively managed, it seems to approximate the returns of the Dow Jones Islamic International Titans 100 Index. The fund will be managed by Samim Abedi. Its opening expense ratio has not been disclosed.
Wasatch Long/Short Alpha Fund
Wasatch Long/Short Alpha Fund will seek long-term growth of capital. The plan is to build a global, all-cap long/short portfolio with rather more exposure to small- and mid-cap stocks than is typical. This is Wasatch’s second attempt at a long-short fund. The fund will be managed by Mick Rasmussen, a quant analyst for the US and global small cap teams. Its opening expense ratio is 1.75%, and the minimum initial investment will be $2,000.
