As equities keep reaching new highs in one of the calmest markets in history, ETF issuers this week concentrated on bringing fixed income and other strategies to market.
Here are this week’s new fund launches:
|Ticker||Name||Issuer||Launch Date||kendrawilkinson.info Category||Expense Ratio|
Hartford Total Return Bond ETF
|Hartford Funds||09/27/2017||Total Bond Market||0.39%|
Anfield Capital Diversified Alternatives ETF
|Regents Park Funds||09/28/2017||Diversified Portfolio||1.30%|
PowerShares PureBeta US Aggregate Bond Portfolio
|Invesco||09/29/2017||Total Bond Market||0.05%|
NuShares ESG U.S. Aggregate Bond ETF
|Nuveen||09/29/2017||Total Bond Market||0.20%|
VanEck Vectors NDR CMG Long/Flat Allocation ETF
|Van Eck||10/04/2017||Diversified Portfolio||0.59%|
For a list of all new ETF launches, take a look at our ETF Launch Center.
Hartford Debuts Active Bond ETF
It’s not often that you hear about actively managed bond funds, but the Hartford Funds group launched just such a product this week. The Hartford Total Return Bond ETF (HTRB ) is sub-advised by Wellington Management, the company behind the popular Vanguard Wellington (VWELX) and Vanguard Wellesley Income (VWINX) funds, and essentially scours the entire fixed income universe to uncover value wherever it can be found. That can include government and agency notes, corporate bonds, and asset- or mortgage-backed securities or bonds issued by foreign governments and sovereignties.
The fund will typically invest at least 70% of assets in investment-grade bonds but can go up to 20% in junk bonds for added growth. It also has the ability to use derivatives, such as futures or options, to help manage the portfolio’s overall risk.
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A Fund of Funds That Ventures off the Beaten Path
Regents Park enters the ETF marketplace with a fund that’s designed to both reduce risk and increase returns across all market cycles. The Anfield Capital Diversified Alternatives ETF (DALT ) is an actively managed fund of funds that makes periodic tactical adjustments to its portfolio in order to continuously maximize its risk/return profile. It invests in a broad group of segments, sectors and markets that the fund’s managers deem to be “alternative asset classes” and can include equities, bonds, commodities, real estate, and options strategies.
The fund currently counts financials, real estate and healthcare among its top sector holdings and has about 20% of assets invested overseas. Top holdings include the PowerShares Dynamic Biotechnology & Genome ETF (PBE ) and Ares Capital Corp.
Invesco Adds to Ultra-Cheap PureBeta Lineup
Last week, Invesco debuted five funds in its PowerShares PureBeta lineup that are designed to provide broad market coverage while charging very little in fees. A sixth ETF was added this week in the form of PowerShares PureBeta U.S. Aggregate Bond ETF (PBND ). The fund is designed to be a generic total bond market index fund and invests in a broad array of investment-grade government, corporate and mortgage-backed bonds.
Like the other PureBeta funds, Invesco is not offering a unique product, but it is looking to compete on price. With an expense ratio of just 0.05%, this fund is on par with the Vanguard Total Bond Market ETF (BND ) and trails only the 0.04% expense ratio of the Schwab U.S. Aggregate Bond ETF (SCHZ ) in the fixed-income space.
For a list of all Invesco PowerShares ETFs, including the new PureBeta lineup, click here.
A Bond Market ETF With (Social) Conscience
Socially responsible investing continues to grow as a smart-beta strategy that allows folks to align their beliefs with their investments. The newly launched NuShares ESG U.S. Aggregate Bond ETF (NUBD ) is one of the few that brings the concept to the fixed-income space.
Also a total investment-grade bond market ETF, it screens out companies that fail to meet specific environment, social and governmental standards. It eliminates companies that manufacture products such as weapons, alcohol and firearms, and also those that score poorly on human rights concerns, business ethics, health, safety and environmental impact. Issues heavily dependent on oil, gas, metals and mining are also excluded from the universe.
VanEck Takes a Tactical Approach
The VanEck Vectors NDR CMG Long/Flat Allocation ETF (LFEQ ) has a pretty simple strategy. The fund’s underlying index, the Ned Davis Research CMG US Large Cap Long/Flat Index, uses a proprietary model to produce trade signals indicating how much should be invested in stocks at any given time. The fund uses the Vanguard S&P 500 ETF (VOO ) as the “long” position and the Solactive 13-week U.S. T-bill Index to represent the “flat” position.
At any point, the fund’s allocation to equities will be either 100%, 80%, 40% or 0%, with any remainder invested in T-bills. The primary goal of the fund’s proprietary model is to maximize exposure to equities when they are looking bullish and switch to cash when the markets begin trending downward.
The Bottom Line
The three bond fund offerings are fairly common in their strategy but the other two are more unique. Many of the holdings in the Diversified Alternatives ETF are likely not held by many investors. This fund could be a high-risk, high-reward opportunity for those comfortable with such risks. The Long/Flat Allocation ETF is largely an attempt at market timing, a strategy that doesn’t often pay dividends.
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