“The Dent Tactical ETF (DENT) from AdvisorShares may very well be the dumbest ETF of 2009. I hesitate to speak so soon, as the ETF industry rapidly expands and three months remain in the calendar year, but this new fund is truly one of the worst ideas I have seen in quite some time. Launched on Sept. 16, DENT is an actively managed ETF with “five key attributes”: proprietary demographic analysis, tactical investment approach, risk mitigation process, management expertise and active management. Forget cap-weighted, revenue-weighted or dividend-weighted, DENT takes methodology complexity to a whole new level. Oh, by the way, the total expense ratio is 1.56% and the management fee is 0.95%,” Don Dion Reports From The Street.
“The ETF industry is booming, and with good reason. Investors have sought out ETFs because of their transparency, low expense ratios, sector access and hedge-ability. DENT is a high-cost ETF whose assets are adjusted at the portfolio at the manager’s whim and whose daily holdings are published only after the trading day is complete. DENT is the first actively managed ETF to rely on ETFs as components. Layering ETF on top of ETF has the effect of taking low-cost vehicles and making them high-cost. The managers of (DENT) have promised to cap the fund’s net expenses at 1.50% for the next 50 weeks. What is included in the fund’s 1.56% total expense ratio? A management fee of 0.95%, “acquired funds” fees of 0.17%, interest, taxes, brokerage commissions, expenses, and extraordinary expenses,” Dion Reports.
Dion continues to write “While the high fees will certainly turn off many investors, I believe that the fund’s fuzzy strategy is even more damaging to this new ETF’s success. DENT managers will purportedly use the five key attributes to track “the overall trend of the U.S. and global economies and how consumer spending patterns may change based on this analysis.” Investors are better served considering the fundamentals of the DENT strategy, rather than buying DENT itself. By analyzing trends in consumer spending, looking for areas of potential growth and mitigating risk, investors can build a successful portfolio.”
See The Full Article: HERE