by David Snowball
By law, the Securities and Exchange Commission has 60 to 75 days to review a proposed new fund before offering it to the public. We examine actively managed funds and ETFs in our pipeline each month. Summer is a slow time for new fund launches, with pipelines filling up in November in hopes of reaching the market by December 30th.
Many new funds, like many existing funds, are bad ideas. (Do you really want his ETF investing in a single AI stock?) Most will languish in justifiable darkness.That said, every month Some promising options that investors may choose to pursue.
Two, or perhaps two and a half, to add to your radar:
Fund 1: Genoa Opportunistic Income ETF
The Genova Opportunistic Income ETF (XFIX) seeks to maximize total return, including both income and capital appreciation, by identifying undervalued and opportunistic sectors and securities in the U.S. fixed income market. This fund is actively managed and charges a fee of 0.45%. This strategy is opportunistic and has few constraints – bonds, commercial paper, derivatives, preferred stock and convertible bonds are all fair strategies – other than that Limited to 20% for non-investment grade bonds and 20% for municipal bonds. It will be managed by Peter Baden, Chief Investment Officer of Genoa Asset Management, Justin Hennessy and Marcin Zdunek of North Slope Capital.
In general, I shy away from funds whose investment pitch boils down to “trust us.” That said, Baden and Hennessy also run f/m Genoa’s opportunistic revenue strategy for private clients. As of March 31, 2023 fact sheet, this strategy has consistently outperformed the broader bond market over the long term.
Rank columns are expressed as percentiles. It was in the top 10% of comparable individually managed accounts over the last 10 years, but was in the bottom 27% year-to-date through March 31. Other data in the factsheet point to five-year risk metrics that are broadly favorable for the broader bond market.
Fund 2: Dynamic Alpha Macro Fund
The Dynamic Alpha Macro Fund (DYMAX) intends to seek above-market returns. “Macro” refers to key macroeconomic themes such as growth, interest rates, and inflation that help shape portfolios. About 50% of the portfolio is invested in domestic equities (divided via ETFs into 40% growth stocks, 40% high dividend stocks and 20% “broad market” stocks), with the remaining 50% invested in futures trading strategies. be. The strategy, now embodied in a hedge fund, will opportunistically target six asset classes: currencies, bonds, equities, energy, metals and agriculture. This strategy holds both long and short positions.
Expenses for the fund are high (2.39% investor, 1.99% institutional), but the minimum institutional class prospectus is $1,000.
Bradley Barry is primarily responsible for equity strategies, while David Johnson is responsible for futures strategies. Mr. Barry is a CFP and ChFC qualified founder of fund advisors and in 2017 founded Dynamic Alpha Group, which helps financial advisors create and manage investment portfolios. Mr Johnson manages his GCM hedge fund, which effectively accounts for his 50% of the portfolio. Mr. Johnson began his career at NASA as a systems engineer for the Space Shuttle Program, and worked for Honeywell as an engineer and manager for his space systems for 22 years. You might be surprised at how many investment managers are trained in engineering, mathematics, or computer science rather than traditional financial programs. Both managers are Star Trek fans and have met Captain Kirk personally.
I spoke with the team in June 2023 for the better part of an hour. They are making smart arguments. In investing, each part is (a) individually attractive, and (b) the whole could be greater than the sum of its parts if there is no correlation. – and claims Johnson’s hedge fund has a substantial and impressive performance record. They are working with his two compliance teams to determine how much of that information can be shared and with whom. For example, sharing information with poor and unsophisticated “individual” investors may be prohibited, but providing evidence to sophisticated advisors and other experts may be permitted.
They concluded that while the hedge fund strategy itself is likely to be “too spicy” for the average retail investor and average advisor, the combination of the two strategies would be far more drinkable. In an ideal world, they might aim to produce something close to or better than the S&P 500 return with a 50% downside over a reasonable period of time. They refer to the work of the Standpoint Multi-Asset Fund team that we authored (Standpoint Multi-Asset Funds: Force Me to Reconsider, 2021) as representing the potential of blended strategies. recognizing.
I’m interested in what kind of performance data sharing is allowed by regulators.
They understood the general marketing appeal of launching this strategy with an ETF wrapper, but their strategy, even for a semi-transparent ETF, does not fit well with disclosure and reporting requirements. .
Fund expenses are high (2.39% investor / 1.99% institutional investor), but this is typical of such a strategy. What’s not common is that the minimum for educational classes is $1,000 for him.
So the appeal of the investor class is a bit murky to me, but we win where we can.
largely Spotlight: Polen Capital Global Growth ETF
The Polen Capital Global Growth ETF (PCGG) is a pollen growth growth fund. The fund will be a non-diversified, actively managed exchange-traded fund holding 25-40 large-capitalization stocks, including emerging markets. The same management team, which incorporates “material environmental, social and governance (ESG) factors” into its assessment of a company’s long-term financial sustainability.
Since its inception, the fund has put competition into a smoke of sorts.
Lifetime performance comparison (since 201501)
annual revenue | maximum drawdown | standard deviation | Lower price deviation | Ulcer index |
sharp ratio |
|
Global growth of pollen | 10.4% | -35.6 | 15.9 | 10.7 | 10.7 | 0.58 |
Global Large Cap Growth Category Average | 9.0 | -35.5 | 17.3 | 11.5 | 11.3 | 0.46 |
Source: MFO Premium Fund Screener
There are two lost yellow flags. First, Robo Morningstar recently downgraded the fund’s rating from “neutral” to “negative.” I’m skeptical of robo-judgement, but I also realize that it incorporates data points that may be important but not immediately obvious to me yet. Second, the fund’s 3- and 5-year performance against the fund lags far behind its long-term performance.
Pollen is generally very hard. I’m excited about his ETFs and the potential for cheaper access to this strategy. I say “expect” because ETFs are generally marketed at a price, but the draft prospectus does not yet include an expense ratio.