Major Moves Oct: Assets Grow, Focus On Active Bond ETFs (GTAA, ELD, GRV, AADR, DENT, ALT, MINT, CCX, CEW, BZF)
The S&P500 was up 3.69% in the month of October, continuing the strong returns from the stellar month in September when the S&P was up nearly 9%. The NASDAQ surpassed the S&P numbers to deliver 5.86% returns for October. The market continued to rally as the US Fed essentially confirmed for the markets on several occasions that QE2 is going to happen, it’s more a matter of when and how much.
In Active ETF land, October was a month of more new product filings from current issuers looking to expand their line-up of actively-managed ETFs and also of continuing debate on the merits and deficiencies of the Active ETF structure. AdvisorShares also launched its Cambria Global Tactical ETF (NYSE:GTAA) in the closing week of October to significant investor interest as it scooped up more than $17 million in assets after just 4 days on the market. AdvisorShares also filed for two new funds with Strategic Income Management (SiM) – the company which absorbed Emerald Rock Advisors, with whom AdvisorShares was collaborating with previously to launch two separate actively-managed ETFs. The filing for those two products was subsequently withdrawn, presumably in response to Emerald Rock being absorbed by SiM. WisdomTree also filed plans for 3 more actively-managed bond ETFs, clearly encouraged by the success of its first fixed-income fund, the Emerging Market Local Debt Fund (NYSE:ELD).
Gary Gastineau, Principal at ETF Consultants, also gave us a detailed run-through of what NAV-based trading is all about and how it can help overcome the deficiencies of the existing Active ETF structure and make it more effective. More discussions resulted from an article published by McKinsey’s Financial Services Practice that opined on what it will take for actively-managed ETFs to become disruptive.
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Assets within the Active ETF space in the US grew by another $125 million, finishing at $2.34 billion at the end of October. Starting with AdvisorShares, its Mars Hill Global Relative Value Fund (NYSE:GRV) has largely stagnated since the surge in assets it saw immediately after its launch when it gathered close to $40 million in assets within 3 weeks. In October, GRV shrank by $0.72 million. AdvisorShares other two existing products, the Dent Tactical ETF (NYSE:DENT) and the WCM/BNY Mellon Focused Growth ADR ETF (NYSE:AADR) have both had a hard time gathering funds over the last few months as well. However, AdvisorShares scored big with its latest fund launch – the Cambria Global Tactical ETF (NYSE:GTAA), run by Mebane Faber who is the author of the popular book, “The Ivy Portfolio”. GTAA was able to attract more than $17 million in assets within 4 days of launch, but we’ll have to wait and see whether this surge in assets will continue or whether GTAA will also plateau like other AdvisorShares funds.
In what has come to be expected now, iShares’ Diversifed Alternatives Trust (NYSE:ALT) continued to gather assets slowly and steadily, increasing by another $10 million this month and crossing the $100 million mark. PIMCO’s Enhanced Maturity Fund (NYSE:MINT) also continued to have a volatile asset base due to the nature of the fund, being a money-market alternative. MINT gathered $92 million in assets this month to finish at around $440 million in assets.
WisdomTree continues to find traction for ELD as the fund attracted another $100 million of investor money this month. WisdomTree’s other new launch, the Dreyfus Commodity Currency Fund (NYSE:CCX), is off to a slower start with assets standing at $20 million a month after launch. The gains though were offset by losses in its older currency funds such the Brazilian Real Fund (NYSE:BZF) which lost $64 million and the Emerging Currency Fund (NYSE:CEW) which lost more than $100 million.
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In Canada, the actively-managed ETF landscape continues to be dominated by Horizons AlphaPro, which really saw its first strong success with the launch of the AlphaPro Corporate Bond Fund (TSE:HAB) that gained another $33 million in assets this month to reach a $273 million market cap. The fund’s success highlights the relevance and demand for actively-managed bond offerings given that they have also been quite successful in the US.
New Entrants, Filings and Closures:
1. WisdomTree plans actively-managed Brazil bond fund – direct link
2. AdvisorShares files for two actively-managed ETFs with Strategic Income Management – direct link
3. WisdomTree files for 3 more actively-managed bond ETFs – direct link
Written By Shishir Nigam from ActiveETFs | InFocus Disclosure: No positions in above-mentioned names.
Shishir Nigam is the founder of ActiveETFs | InFocus (http://www.etfshub.com/), which provides extensive coverage and analysis of actively-managed ETFs in US and Canada, including debates on major industry trends, insights on the latest product launches from issuers in the Active ETF space as well as in-depth interviews with industry executives and thought leaders.
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