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 33 new products into the pipeline, most of which will launch by the end of late November.
French historian Jean Francois Marmontel (1723-99) coined, and the American agitator Thomas Paine (in The Age of Reason, 1793) popularized, the phrase “from the ridiculous to the sublime.” This month’s offerings perfectly capture that sentiment, ranging at they do from a bunch of marketing confections destined for ignominy and closure to a floating rate fund from Artisan Partners, an ETF that captures the equity portion of FPA Crescent’s portfolio and the conversion of the really solid Motley Fool Global Opportunities Fund into an ETF.
The two sets of offerings that give me the most pause are:
RCG ETF, an ETF version of the Sequoia Fund. There was a time when people rhapsodized about “the mighty Sequoia” and waited years in hopes that the long-closed titan would reopen. That time has passed. Sequoia’s rank in its 138 fund Lipper Multi-Cap Growth peer group is …
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- Annual return: 110th
- Sharpe ratio: 111th
- Capture ratio (S&P500): 115th
- Downside deviation: 97th, that is, 97 have better “bad volatility” scores than Sequoia
- Maximum drawdown: 120th
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I wonder where else there would be any buzz around the announcement, “Hey, guys, we’re offering a clone of the 115th best fund in its peer group! Climb abroad”?
There’s a really thoughtful discussion of the prospect on MFO’s discussion board.
A suite of four Steward equity funds. Crossmark Steward is a faith-based investment house with six (soon-to-be eleven) funds that run the gamut from really solid performers to really soft ones. The driver for these new launches is the arrival of Robert (Bob) Doll, a guy who has already had a long, high-visibility career and who is very committed to faith-based investing. That said, he’s was born in 1955 and is in, likely, the latter stages of his career. Having him take the lead on four new funds at a firm far smaller than his earlier employers is curious and might warrant a bit of reflection on the part of prospective investors.
Alger Weatherbie Enduring Growth Fund
Alger Weatherbie Enduring Growth Fund will seek long-term capital appreciation. The plan is to build a portfolio of no more than 30 growth stocks, primarily mid-caps, that Weatherbie believes have enduring earnings, reasonable valuations and a distinct competitive advantage. The portfolio is also ESG-screened. The fund will be managed by H. George Dai, Ph.D. and Joshua D. Bennett of Weatherbie Capital. Its opening expense ratio for “A” shares will be 1.15%, and the minimum initial investment will be $1,000.
Amberwave Invest USA JSG Fund
Amberwave Invest USA JSG Fund, an actively managed ETF, seeks long-term capital appreciation. The plan is to invest in companies that contribute to U.S. jobs (25% weight in the portfolio screening), security (50% weight), and growth (25% weight). This ethos is embraced by one new fund every couple of years; to my best recollection, none of its predecessors have survived the test of the American marketplace. The fund will be managed by a three-person team from Amberwave Partners. Its opening expense ratio is 0.75%.
Amplify Decentralized Finance & Crypto Exposure ETF
Amplify Decentralized Finance & Crypto Exposure ETF, an actively managed ETF, seeks total return. The plan is to invest in companies that advance the crypto / defi realm (at least 40% of the portfolio) and in companies that are highly correlated to the price movements of cryptocurrencies. Not sure if that’s an earnings correlation or a share price correlation. The fund will be managed by a team led by Michael Venuto of Toroso Investments. Its opening expense ratio has not been disclosed.
Artisan Floating Rate Fund
Artisan Floating Rate Fund will seek total return through a combination of current income and long-term capital appreciation. The plan is to construct a diversified portfolio of floating rate debt instruments (floating-rate leveraged loans, which could include, among other types of loans, senior secured loans, unsecured loans, second lien loans, bridge loans, and junior loans) which are issued by firms with high-quality business models that have compelling risk-adjusted return characteristics. The fund will be managed by Bryan Krug and Seth Yeager. Mr. Krug manages the (closed, five-star, $7 billion) Artisan High Income Fund and Mr. Yeager serves as one of his analysts. Its opening expense ratio has not been disclosed and the minimum initial investment will be $1,000.
Bitwise Bitcoin Strategy ETF
Bitwise Bitcoin Strategy ETF, an actively managed ETF, seeks long-term capital appreciation. The plan is to invest in a combination of bitcoin futures (but not bitcoins themselves ‘cause that’s not permitted by the SEC) and short-term securities. There’s an interesting and distinctive risk disclosure focusing on “whipsaw markets risk” as well as for the possibility of “dramatic declines.” The fund will be managed by our friends [ ], [ ], [ ], and [ ]. Its opening expense ratio is, likewise, not known.
BlackRock Future U.S. Themes ETF
BlackRock Future U.S. Themes ETF, an actively managed ETF, seeks long-term capital appreciation. The plan is to use “a systematic framework for analyzing companies and seeking proactive risk-management by focusing on theme identification, theme evaluation, and portfolio construction.” What themes? What’s up with “Future US Themes” in the name? No hint, except for the promise of pursuing multiple themes. That sense of mystery extends to the management team, who are unnamed in the prospectus. Likewise, its opening expense ratio has not been disclosed.
Calamos Global Sustainable Equities Fund
Calamos Global Sustainable Equities Fund will seek long-term capital appreciation. The plan is to build a global portfolio of ESG-screened growth stocks. At least 40% of the portfolio will be invested outside of the US and that might include companies in emerging markets. The fund will be managed by James Madden and Anthony Tursich. Its opening expense ratio has not been disclosed, and the minimum initial investment for “A” shares will be $2,500.
Conestoga Micro Cap Fund
Conestoga Micro Cap Fund will seek long-term growth of capital. The plan is to invest in the stocks of higher quality micro-cap companies that have been growing through multiple business cycles. This is the conversion of Conestoga’s micro-cap hedge fund whose record is not yet available. The fund will be managed by David R. Neiderer, CFA, and Joseph F. Monahan who are responsible for its predecessor fund. Its opening expense ratio is 1.50%, and the minimum initial investment will be $2,500.
Connors Hedged Equity Fund
Connors Hedged Equity Fund will seek capital appreciation and some income, with lower volatility than U.S. equity markets. The plan is to invest in 25-50 high-quality mid- and large-cap firms then hedge the portfolio by writing call options on 25-75% of the portfolio. The fund will be managed by Robert Cagliola and Robert Hahn. Its opening expense ratio is 1.15%, and the minimum initial investment will be $25,000.
First Eagle Global Real Assets Fund
First Eagle Global Real Assets Fund will seek long-term growth of capital. The plan is to invest in “real assets” (gold bullion, precious metals, TIPs) and in industries tied to such assets (base materials, industrials, chemicals, energy, infrastructure, real estate, utilities, and related suppliers). The expectation is that such assets will perform relatively well in periods of rising or high inflation. The fund will be managed by Benjamin Bahr, John Masi, George Ross, and David Wang. Its opening expense ratio has not been disclosed, and the minimum initial investment for “A” shares will be $2,500. The fund will debut in November 2021.
FMC Excelsior Focus Equity ETF
FMC Excelsior Focus Equity ETF, an actively managed, non-transparent, non-diversified ETF, seeks long-term capital appreciation. The plan is to buy and hold 25-30 high-quality stocks though, at inception, “the Fund expects to hold significantly more than the usual 25-30.” Two notes: (1) no reason why and (2) “the Fund” is a legal fiction, not a person, and hence “expects” nothing. The fund will be managed by Himayani Puri, director of research for First Manhattan. Its opening expense ratio is not known.
FPA Global Equity ETF
FPA Global Equity ETF, an actively managed ETF, seeks long-term growth of principal and income. The plan is to build a global value portfolio using the firm’s Contrarian Value Equity Strategy. You might be forgiven for suspecting that this is pretty much just the equity portfolio from FPA Crescent. The fund will be managed by Steve Romick, Mark Landecker, and Brian A. Selmo. Its opening expense ratio is 0.49%.
Gen Z ETF
Gen Z ETF, an actively managed ETF, seeks capital appreciation. The plan is to invest in 50 companies that are “most relevant to Generation Z.” There’s a lot of talk about the sorts of Z Scores (the Gen Z Disruption score) that will determine who makes the portfolio. From the outside, the portfolio construction seems driven by the desire to make something marketable, as with the various “young investor” funds. The fund will be managed by Leonard (Lenny) Feder. Its opening expense ratio is 0.60%.
GIA Core Plus Fund
GIA Core Plus Fund will seek total return derived primarily from interest income and secondarily from price appreciation. The plan is to build a broadly diversified portfolio that invests in U.S. core fixed income markets and focus on global credit to generate most of the strategy’s excess returns. The fund will be managed by a six-person team from GIA Partners. Its opening expense ratio is not known, and the minimum initial investment for Investor shares will be $1,000 while Institutional shares will be available at $10,000.
Grizzle Growth ETF
Grizzle Growth ETF, an actively managed ETF, seeks capital appreciation. The plan is to invest in 30-60 growth stocks in trendy industries, from solar and crypto finance to gaming and plant-based meat. The fund will be managed by Thomas George and Scott Willis of Grizzle Investment Management. Its opening expense ratio is 0.75%.
Janus Henderson B-BBB CLO ETF
Janus Henderson B-BBB CLO ETF, an actively managed ETF, seeks capital preservation and current income by investing in floating-rate securities with exposure to collateralized loan obligations (that’s the “CLOs”) generally rated between and inclusive of BBB+ and B- (the B-BBB). The fund will be managed by John Kerschner and Nick Childs. Its opening expense ratio has not been disclosed.
John Hancock Preferred Income ETF
John Hancock Preferred Income ETF, an actively managed ETF, seeks a high level of current income, consistent with preservation of capital. The plan is to buy preferred stocks and other preferred securities, including convertible preferred securities, contingent convertible securities, and corporate hybrid securities. Up to 50% of the portfolio holdings might be lower-quality issues. The fund will be managed by Joseph H. Bozoyan and Bradley L. Lutz, CFA. Its opening expense ratio is not known.
MFAM Global Opportunities ETF
MFAM Global Opportunities ETF, an actively managed ETF, seeks long-term capital appreciation. The plan is to build a focused portfolio of common stocks from high-quality U.S. and non-U.S. companies. This represents the conversion of MFAM’s successful $700 million Global Opportunities mutual fund into an ETF format. The fund will be managed by the same four people that manage the fund. Its opening expense ratio is 0.85%. For those of you who aren’t one of the cool kids, MFAM is Motley Fool Asset Management.
MFAM Mid-Cap Growth ETF
MFAM Mid-Cap Growth ETF, an actively managed ETF, seeks long-term capital appreciation. The plan is to build a focused portfolio of high-quality midcap companies. This is the conversion of the $300 million MFAM Mid-Cap Growth Fund, which started life as the Motley Fool Great America Fund, into an ETF. The mutual fund is, to be blunt, just okay. The fund will be managed by the four managers who run the mutual fund (and the Global Opps fund). Its opening expense ratio is 0.85%.
MFS Intrinsic Value Fund
MFS Intrinsic Value Fund will seek capital appreciation. The plan is to build an all-cap, possibly global, portfolio of firms whose stock is undervalued relative to its … well, intrinsic value. The fund will be managed by Timothy W. Dittmer and Benjamin Stone. Its opening expense ratio is “[[Report does not exist]],” and the minimum initial investment will be $1,000. That’s waived for accounts set up with automatic investing plans. The fund’s curiously delayed launch date is February 2022.
PGIM Total Return Bond ETF
PGIM Total Return Bond ETF, an actively managed ETF, seeks total return. The plan is to buy a combination of US Government securities, mortgage-related and asset-backed securities, corporate debt securities, and foreign debt securities. Up to 30% of the fund might be invested in junk bonds and up to 30% in non-US securities. The fund will be managed by a five-person team from Prudential. Its opening expense ratio is 0.49%.
RCG ETF
RCG ETF, an actively managed ETF, seeks long-term growth of capital. The plan is to buy undervalued securities and to hold cash substitutes when there aren’t enough good options to be found. As a practical matter, it’s the ETF version of Sequoia Fund. The fund will be managed by Sequoia’s managers. Its opening expense ratio has not been disclosed.
Sterling Capital Diversity Equity & Inclusion Active ETF
Sterling Capital Diversity Equity & Inclusion Active ETF, an actively managed ETF, seeks long-term capital appreciation through strategies managed by sub-advisers that are majority diverse-owned (i.e., greater than 50 percent owned, controlled, and operated by persons of designated diverse backgrounds, including women, racial minorities, LGBTQ+ individuals, veterans, and disabled individuals). The portfolio is balanced between large value, large growth, and mid-cap core. Boston Common Asset Management handles the large-cap value sleeve, GQG Partners does large-cap growth strategy and EARNEST Partners LLC will be responsible for U.S. mid-cap core strategy. Its opening expense ratio has not been disclosed.
Steward Equity Market Neutral Fund
Steward Equity Market Neutral Fund will seek capital appreciation independent of the U.S. equity market. The plan is to use a values-based screen to create a mostly large-cap long portfolio, then match it with a short portfolio in hopes that returns for the fund will be driven by the superiority of the companies in the long portfolio rather than broad market movements. The fund will be managed by Robert Doll and Ryan Caylor. Mr. Doll is, to put it gently, famous: formerly Chief Equity Strategist at Nuveen and BlackRock, President and Chief Investment Officer at Merrill Lynch Investment Managers, Chief Investment Officer at Oppenheimer Funds, and beloved talking head on CNBC. Its opening expense ratio for “A” shares is 2.25%, and the minimum initial investment will be $1,000. The same prospectus gives Messrs. Doll and Caylor responsibility for three other funds, all likely to launch in November: Steward Large Cap Core Fund, Steward Large Cap Growth Fund, and Steward Large Cap Value Fund. Presumably, each of those funds owns a slice of this fund’s long portfolio. Steward Small Cap Growth Fund will be managed by Brent Lium.
The NextGen Trend and Defend ETF
The NextGen Trend and Defend ETF, an actively managed ETF, seeks capital appreciation. The plan is to figure out what the market’s trend is and buy S&P500 ETFs if the market is positive, inverse ETFs if it’s negative, and short-term Treasury ETFs if it can’t make up its mind. The fund will be managed by Chuck Brokop and Sean Puckett of Tuttle Capital Management. Its opening expense ratio is 1.0%.
UBC Algorithmic Fundamentals ETF
UBC Algorithmic Fundamentals ETF, an actively managed ETF, seeks long-term capital appreciation. The plan is to invest in 40-80 large-cap stocks using “proprietary artificial intelligence (AI) algorithms” to pick the winners by identifying growth companies “with predicted expanding fundamentals.” The fund will be managed by an unnamed manager from an unnamed sub-adviser. Its opening expense ratio is 0.75%.
VegTech Environmental Impact and Plant-based Innovation ETF
VegTech Environmental Impact and Plant-based Innovation ETF, an actively managed ETF, seeks long-term growth of capital. The plan is to invest in innovators in developing products, services, trade secrets, technology, methods, and advancements in scientific research relating to the areas of plant-based foods, cell-cultured foods, precision fermented foods, animal-free agriculture, animal-free materials, and scientific services. The fund will be managed by a four-person team from Penserra Capital Management. Its opening expense ratio is 0.75%.
WealthTrust DBS Long Term Growth ETF
WealthTrust DBS Long Term Growth ETF, an actively managed ETF, seeks long-term growth of capital with a secondary objective of providing dividend income. It’s a sort of managed futures fund with lots of complexity but a core belief that “the trend is your friend” and that they can maneuver the fund to profit from it. The fund will be managed by as-yet-unnamed parties. Its opening expense ratio is not known.
Westwood Quality MidCap Fund
Westwood Quality MidCap Fund will seek long-term capital appreciation. The plan is to invest in 50-80 securities that are undervalued in relation to the broader market and issued by mid-cap corporations (including REITs and MLPs) which employ superior business models compared to their competition and possess strong balance sheets and free cash flow. The fund will be managed by Trip Rodgers, Lauren Hill, and Michael Wall. Its opening expense ratio is 0.78%, and the minimum initial investment will be $100,000.
