Updates
Tortoise Capital Advisors is merging three closed-end funds, with combined assets of over $300 million, into a single actively managed ETF. The current funds are Tortoise Power and Energy Infrastructure Fund (TPZ), Tortoise Pipeline & Energy Fund (TTP), and Tortoise Energy Independence Fund (NDP). They will be supplanted by the Tortoise Power and Energy Infrastructure ETF which will adopt TPZ’s strategy for its own. As a warning: the Morningstar star ratings on the funds (two-, three- and zero stars) are somewhere between useless and misleading. The number of funds in their respective peer groups is 7, 9, and 3.
At the same time, they’ve decided to sell their UK-based Ecofin Advisors Limited business and its private credit unit.
Tortoise is based in Overland Park, Kansas, and manages about $8 billion in assets. Their founder, Tom Florence, had a long career at Fidelity then founded and was president of Morningstar Investments Services.
Briefly Noted . . .
More fund-to-ETF conversions are in the pipeline: sometime in the first quarter of 2025, abrdn Focused U.S. Small Cap Equity Fund becomes abrdn Focused U.S. Small Cap Active ETF (though really, wouldn’t abdrn fcsd us smll cap qty fall trippingly from the tongue?) and abrdn Emerging Markets Dividend Fund morphs into abrdn Emerging Markets Dividend Active ETF. It’s still pronounced “Aberdeen,” by the way. A witty Wikipedia entry attributes the disemvowelling of the funds to the fact that the website “Aberdeen.com” had already been claimed by something else while the nonsensical “abrdn.com” was still free and on the loose.
Brown Advisory Flexible Equity ETF is in registration. The ETF will be actively managed by Maneesh Bajaj. The ETF invests primarily in securities of medium and large market capitalization companies that the Adviser believes have strong, or improving, long-term business characteristics and share prices that do not reflect these favorable fundamental attributes. Medium and large market capitalization companies are, according to the Adviser, those companies with market capitalizations generally greater than $2 billion at the time of purchase utilizing a “flexible equity” philosophy. Flexibility allows the Adviser to look at many types of opportunities expanding the bargain-hunting concepts of value investing to a broad range of opportunities. Expenses have not been stated as of this writing.
The FPA Short-Term Government ETF is in registration. The ETF will invest primarily in at least 80% of its assets in debt securities issued or guaranteed by the U.S. government and its agencies and instrumentalities, and in repurchase agreements in respect of such securities. Abhijeet Patwardhan, who manages the FPA New Income Fund, will be the day-to-day manager. Expenses have not been disclosed.
FinTrust Income and Opportunity Fund (HROAX) might be getting a new management team. Not sure yet, but “FinTrust Capital Advisors, LLC (“FinTrust”), is the current adviser to the Fund … FinTrust recommended that M3Sixty Capital take over management of the Fund under the New Advisory Agreement or that the Fund be liquidated, effective on the Closing Date.” Well, let me guess how this will play out.
In November 2024, New America High Income Fund, a third-party closed-end fund, will transfer all its assets – about $175 million – into the T. Rowe Price High Yield Fund. New America has two distinguishing features: (a) it is about 30% leveraged and (b) it’s been managed since inception by the T. Rowe Price High Yield managers. The merger is a major win for New America shareholders who have been footing a charge of 4.29% annually which is just about half of the portfolio’s average return over the past five years.
Vanguard announced plans to introduce Vanguard Core Tax-Exempt Bond ETF (VCRM) and Vanguard Short Duration Tax-Exempt Bond ETF (VSDM), two active municipal ETFs that will be managed by Vanguard Fixed Income Group. Vanguard Core Tax-Exempt Bond ETF will offer all-curve exposure to primarily high-quality, investment-grade municipal bonds that offer tax-exempt income. Investors in Vanguard Short Duration Tax-Exempt Bond ETF can expect a portfolio of short-duration and primarily high-quality, investment-grade municipal bonds that generate tax-exempt income with lower interest rate sensitivity.
Vanguard Core Tax-Exempt Bond ETF will have an estimated expense ratio of 0.12% compared with the average expense ratio for competing funds of 0.37% as of June 30, 2024. Vanguard Short Duration Tax-Exempt Bond ETF will also have an estimated expense ratio of 0.12% compared with the average expense ratio for competing funds of 0.24% as of June 30, 2024. Vanguard intends to launch the ETFs before the end of the year.
On August 16, 2024, UBS Asset Management agreed to transfer the management of UBS AM’s Quantitative Investment Strategies business, which includes the portfolio management team of the Funds to Manteio Scalable Technologies LLC. Manteio has no operating history and is a newly formed investment adviser who is in the process of registering with the SEC. In consequence, the Credit Suisse Managed Futures Strategy Fund will become the Manteio Managed Futures Strategy Fund while the Credit Suisse Multialternative Strategy Fund morphs into the Manteio Multialternative Strategy Fund.
Western Asset Management co-chief investment officer Ken Leech faces a potential enforcement action from the Securities and Exchange Commission as part of a probe into whether some clients were favored over others in allocating gains and losses from derivatives trades. Franklin-Templeton acquired Western Asset with its 2020 purchase of Legg Mason.
Small Wins for Investors
Amplify Cash Flow Dividend Leaders ETF has extended its fee waiver so that investors pay 0.0% to own the fund.
Closings (and related inconveniences)
Old Wine, New Bottles
Effective on or about January 8, 2025, Allspring Emerging Markets Equity Income Fund becomes Allspring Emerging Markets Equity Advantage Fund. Given that there are no changes to the fund’s strategy, the “advantage” in question seems to be “equity income.”
On or about October 14, 2024, the Amplify Global Cloud Technology ETF descends from the clouds and becomes the Amplify Bloomberg AI Value Chain ETF. What, you ask, is an AI value chain, and will it make you nearly as rich as your blockchain fund did? The advisor reports, “The Bloomberg AI Value Chain Index tracks the performance of [the top 45] cloud computing, semiconductor, and hardware companies focused on the next generation of computing needs.”
Effective on August 19, 2024, AQR Sustainable Long-Short Equity Carbon Aware Fund was renamed AQR Trend Total Return Fund. Yep, “renamed.” This strikes us a lot like declaring that Billy Bob’s Deep Sea Mining Fund has been “renamed” Billy Bob’s Short-Term Municipal Income Fund.
On or about October 15, 2024, the AXS Astoria Inflation Sensitive ETF becomes the AXS Astoria Real Assets ETF. The “real assets” in question are natural resource-linked securities, inflation-linked bonds, and global real estate.
Effective October 10, 2024, BlackRock Future Financial and Technology ETF becomes iShares FinTech Active ETF with a newfound (and statutory) affection for FinTech stocks.
The five-star, $1 billion CrossingBridge Low Duration High Yield Fund has become CrossingBridge Low Duration High Income Fund, effective late August 2024.
They are renaming in response to (1) evolving guidance from the SEC about naming, and (2) in recognition of the fact that the fund has traditionally been a multi-sector vehicle (one of the reasons for hiring a high-yield specialist that is they know when more high yield is not serving their investors). Historically the fund doesn’t exceed about two-thirds in high yield, and Morningstar already recognizes it as multi-sector. Manager David Sherman agrees that that assignment is fair.
The name change reflects those two factors. In conversation, Mr. Sherman was clear that it does not reflect any change to what they do or how they do it.
Morningstar holds a robo-driven disdain for the fund’s advisor, Cohanzick Management, despite admitting that “It has had a five-year risk-adjusted success ratio of 100%, meaning that of the strategies with a five-year track record, 100% have survived and beaten their respective category median on a risk-adjusted basis.”
Effective August 26, 2024, DGA Absolute Return ETF became DGA Core Plus Absolute Return ETF with no changes in fees, strategies, or leadership. It’s a small, young ETF-of-ETFs that incorporates a strategy that uses diversification and hedging to target a downside capture of less than 50% of the market and an upside capture of more than 50%. The manager had run the same strategy with some fair success while at Doliver Advisors LP in Texas.
Effective August 29, 2024, ERShares Private-Public Crossover ETF will replace ERShares Entrepreneurs ETF as the name of the fund.
Effective October 7, 2024, the Glenmede Responsible ESG U.S. Equity Portfolio will be changed to the Glenmede Environmental Accountability Portfolio. Hmmm … interesting game.
On September 30, 2024, Jensen Quality Value Fund will be rechristened Jensen Quality MidCap Fund. The name change is accompanied by an embrace of “the name rule,” which means the fund will probably continue to use the same value discipline but commit to investing at least 80% in quality mid-cap stocks.
Effective August 1, 2024, Towle Deep Value Fund became Towle Value Fund. It remains a deep value fund but doesn’t want to burden you with that reminder.
The Ninety-One Funds, formerly the investment arm of Investec, are being adopted by American Beacon, and so on November 15, 2024, Ninety-One Global Franchise Fund and the Ninety-One International Franchise Fund added American Beacon to the front of their names. Ninety-One Emerging Markets Equity Fund follows suit on or about February 21, 2025. There is, to date, no compelling evidence to draw investors toward the funds which, nevertheless, hold about $700 million between them.
WCM Developing World Equity Fund is on the road to becoming First Trust WCM Developing World Equity ETF, an actively managed ETF, as is the larger, more successful WCM International Equity Fund. Developing World is a three-star, $2 million fund that has derived about half of its assets from the three managers’ personal investments. International, managed by the same team, sits at $80 million with four stars. The trio came to WCM from Thornburg and, WCM avers, that their managers are “audacious.” Finally, the four-star, $456 million WCM Focused Global Growth Fund, managed by a different team, will become WCM Focused Global Growth Fund. The changes are submitted to shareholders in September and will likely, become effective before the year’s end.
Off to the Dustbin of History
Allspring Conservative Income Fund will be liquidated on or about October 25, 2024.
Allspring Municipal Sustainability Fund, contrarily, is slated to cease sustainment two weeks earlier, on or about October 9, 2024.
The Amplify Treatments, Testing and Advancements, Inflation Fighter, and Emerging Markets FinTech ETF will be liquidated on or about September 10, 2024. (Was there a point at which any of you thought “I want to ride the tip of the spear! Emerging. Markets. FinTech, baby!!”?)
Bridgeway Managed Volatility will be liquidated on or about November 18, 2024. We sort of tepidly endorsed the fund because it’s … you know, nice. Sensible. Stuck to its knitting. It never wowed anyone but it wasn’t designed to; it was designed to have a slight asymmetry to the upside: an upside capture ratio slightly higher than its downside capture, which it did. But it never caught on, ending up with $32 million in AUM.
On or about September 13, 2024, the Fidelity Latin America Fund will be merged into the Fidelity Emerging Markets Fund. It will be a tax-free reorganization, as most are.
Harbor International Growth Fund will be liquidated and dissolved (you have to appreciate the thoroughness) on October 23, 2024. It’s a $150 million, one-star fund that’s been under Baillie Gifford’s guidance for the past decade. Bad news: it’s returned about 3.7% annually and trailed 94% of its peers. Better news: over the past 15 years, it trailed 99% of its peers so there was some improvement.
Manning and Napier Real Estate will become unreal on October 11, 2024.
MDP Low Volatility Fund will be liquidated on or about September 24.
On August 15, 2024, a series of iShares ETFs were liquidated: the iShares Currency Hedged MSCI Germany, Gold Strategy, International Developed, MSCI Intl Size Factor, USD Systematic Bond, and Virtual Work and Life Multisector ETFs all became former funds.
Royce Global Financial Services Fund, which “is being liquidated primarily because it has not maintained assets at a sufficient level for it to be viable,” departs on September 9, 2024.
Veridien Global Investors LLC reports “experiencing financial difficulties, which has led to the resignation of the Sub-Adviser’s Chief Investment Officer, who was one of the Fund’s portfolio managers.” In light of her resignation, the Veridien Climate Action ETF was liquidated on August 20, 2024.
