Our roundup of industry highlights
Reality Shares introduces blockchain ETF
Reality Shares launched an ETF that gives clients access to China-based companies in the blockchain industry.
The Reality Shares Nasdaq NexGen Economy China ETF (BCNA) will track the Nasdaq Blockchain China Index, which identifies and invests in Chinese companies committing material resources to develop and implement blockchain technology. As of June 21, the fund’s top holdings include Alibaba Group, Baidu, Jiangsu Zhongnan Construction and DHC Software. The expense ratio is 0.78%, according to Morningstar.
“China’s blockchain industry presents an incredibly exciting and long-term investment opportunity, and through BCNA, investors can now easily access this emergent market,” said Reality Shares CEO Eric Ervin.
Ocean Capital launches an AI global macro ETF
Ocean Capital Advisors launched a new ETF that uses artificial intelligence technology to track and project leading economies.
The Rogers AI Global Macro ETF, which has an expense ratio of 1.18%, currently has $2.49 million in total assets and invests primarily in global equity markets.
“The internet and artificial intelligence are changing and have changed everything we know including finance and investing; Ocean’s new ETF is part of the same trend,” said Ocean Chairman Jim Rogers. “I hope we get it right. We will all be extremely pleased someday if we do.”
T. Rowe Price unveils a multi-strategy total return fund
T. Rowe Price has launched a multi-strategy total return fund (TMSRX for Investor Class shares and TMSSX for I Class shares) that seeks to diversify investment risk and provide capital preservation and consistent returns over time.
TMSRX has an expense ratio of 1.37%, with TMSSX at 1.07%. The fund is a combination of six internally managed liquid alternative strategies. It’s considered an absolute return fund, and the goal is to achieve positive returns over time regardless of market conditions, according to the firm. The offering could also lower risks during periods of heightened market volatility by capital preservation and consistent returns over time, the firm says.
“We expect each of the fund’s underlying components to contribute meaningfully to its performance, so no one component should drive all of the returns,” says Stefan Hubrich, co-portfolio manager, director of research, multi-asset division. “We believe that, over time, this diversification will allow us to generate a high level of risk-adjusted performance above the cash benchmark.”
Grayscale sets up 4 crypto funds to improve liquidity
Grayscale, the firm behind the tradable Bitcoin Investment Trust (GBTC), has launched four new cryptocurrency-related investment funds: Bitcoin Cash Investment Trust, Ethereum Investment Trust, Litecoin Investment Trust and XRP Investment Trust, Investopedia reported.
The funds will cover bitcoin cash, ethereum, litecoin and ripple virtual currencies, respectively. Because the funds operate as trusts, only U.S.-based qualified accredited investors are allowed to invest. There is a one-year holding period before the investor can exit the funds without any restrictions, according to Investopedia.
“Digital currencies are not like stocks and bonds. There’s certain technological prowess that people need to have in order to handle them,” Michael Sonnenshein, managing director at Grayscale Investments, told CNBC.
New energy ETF from TriLine honors T. Boone Pickens
TriLine Index Solutions, a BP Capital Fund Advisors affiliate, announced the launch of a new ETF — NYSE Pickens Oil Response (BOON). The fund honors the leadership of T. Boone Pickens, who crafted the Pickens Plan for American energy.
BOON, which has an expense ratio of 0.85%, tracks the performance of the NYSE Pickens Oil Response Index, owned and administered by ICE Data Indices. The index is composed of equities that correlate to energy, and includes not only traditional energy companies but also energy-intensive firms that have the potential to benefit from U.S. energy and global demand for energy.
The mix is intended to lessen the effect of commodity cycles. The index is equally weighted and reconstitutes annually while rebalancing quarterly.
Vitrus announces a new fund
The Virtus KAR Small-Mid Cap Core Fund was introduced by Virtus Investment Partners and affiliated investment manager Kayne Anderson Rudnick. The fund seeks to invest in competitive, high-quality companies and purchase them at attractive valuations.
While factors are far from a new investing phenomenon, “what’s new is to democratize them,” says Andrew Ang, BlackRock’s head of factor-based strategies.
The fund (VKSIX) has an expense ratio of 1.05%. The strategy for the fund mirrors that of KAR’s SMID Core retail separate account, which had $2 billion in AUM as of Dec. 31.
Businesses that are differentiated by above-average returns and trading at attractive valuations are identified using KAR’s disciplined investment process. Portfolio managers expect to invest in 25 to 35 select companies they think are undervalued relative to future growth potential.
BMO reduces fees for 2 U.S. equity funds
Effective Feb. 8, BMO Global Asset Management reduced advisory and total expense ratio cap fees for BMO Large-Cap Growth Fund (MASTX) and BMO Large-Cap Value Fund (MLVIX).
The move reduced the advisory fees by 15 basis points and the total expense ratio cap by 21 basis points.
“We are continuously looking for ways to serve our clients better and offer investors a diverse range of best-in-class products across asset classes and investment styles,” says Phil Enochs, head of BMO GAM U.S. “Reducing the fees of our two largest U.S. equity funds demonstrates our commitment to providing our clients with top-performing funds at a great value.”
Vanguard to launch total world bond ETF
Vanguard filed a statement with the SEC to register Vanguard Total World Bond ETF, and plans to launch by the end of the third quarter this year, according to the firm. The index product will offer investors access to all investment-grade bonds across the globe in one portfolio and reduce volatility, the firm says.
The new fund is going to make investments in two pre-existing Vanguard ETFs: the Vanguard Total Bond Market ETF (BND) and Vanguard Total International Bond ETF (BNDX). The fund, which will have an estimated expense ratio of 0.09%, will track the Bloomberg Barclays Global Aggregate Float Adjusted Composite Index.
Global X Funds’ new ETF targets AI and data companies
Global X Funds is launching the Global X Future Analytics Tech ETF (AIQ), which invests in companies generating vast amounts of data with AI systems to develop actionable insights. The fund, which has an expense ratio of 0.68%, is the seventh from Global X in its technology-themed suite.
“Given AI’s potential to impact a variety of sectors, we believe it is poised to become one of the most significant technological innovations of the modern era,” says Alex Ashby, director of product development at Global X.
MassMutual adds a new target-date series
MassMutual says it is introducing a target-date series for investors looking to reduce volatility and grow their retirement savings. The fund series, the Legg Mason Total Advantage Funds, will be sub-advised by Legg Mason-affiliated manager QS Investors, and will aim to reduce market volatility just before and right after retirement.
The series will use both active and passive investment strategies, and attempt to minimize exposure to large losses as well as combine both active and low-cost passive styles in the 10-year period surrounding retirement.
Morningstar unveils measurement to gauge carbon exposure
Morningstar announced the initiation of its carbon risk score, an evaluation system aimed at determining the carbon emission-related risks in funds. The system will grade approximately 30,000 products globally across a wide spectrum of industries, among which, 6,000 funds will get Morningstar’s low carbon designation.
For investors who have a growing interest in analyzing carbon risks, the scores can help indicate how much of the funds they hold are exposed to fossil fuels or highly polluted industries.
“The carbon risk score is really a way to assess how well-prepared the companies in a fund’s portfolio are for the transition away from a fossil fuel-based economy to a lower carbon economy,” says Jon Hale, Morningstar’s director of sustainability research. “We have more and more investors globally who are interested in better understanding the implications of it on their portfolios.”
Direxion’s latest ETF triples down on new tech companies
Direxion announced a new ETF with exposure three times higher than that of the $2.4 billion Robo Global Robotics & Automation Index ETF (ROBO).
The Direxion Daily Robotics, Artificial Intelligence & Automation Index Bull 3X Shares (UBOT), which has a net expense ratio of 1.22%, will track the Indxx Global Robotics and Artificial Intelligence Thematic Index.
“The robotics, artificial intelligence and automation industries are rapidly growing and evolving,” says Sylvia Jablonski, managing director at Direxion. “The launch of UBOT allows traders to take a bold position in companies that are on the forefront of technology.”
BlackRock introduces tool to assist investors in analyzing funds
BlackRock has unveiled a free online tool that analyzes 2,400 mutual funds and ETFs for retail investors, according to Bloomberg News.
Factor Box enables investors to use a data-oriented method of gauging fund returns based on factors including volatility, size and value. The firm estimates that by 2022 the factor industry’s assets under management will expand to $3.4 trillion from $1.9 trillion in 2017.
“This is a very fast-moving river,” says Andrew Ang, BlackRock’s head of factor-based strategies. He added that, while factors are far from a new investing phenomenon, “what’s new is to democratize them.”
XA Investment announces its first closed-end fund
XA Investments has launched its first closed-end fund. With most of its investments in the credit market, the XAI Octagon Floating Rate & Alternative Income Term Trust (XFLT), which has a total expense ratio of 5%, will seek returns with a focus on income generation.
The $16 billion asset manager, Octagon Credit Investors, will lend its expertise to the trust by sending one of its own to the trust’s management team.
“XFLT is the first of a series of distinctive, demand-driven alternative investment opportunities designed by XAI to provide investors access to institutional quality investment strategies,” said Ted Brombach, co-CEO of XA Investments.
OppenheimerFunds and Pictet launch ESG fund
OppenheimerFunds launched the OFI Pictet Global Environmental Solutions Fund (OPEIX). The fund, which has an expense ratio of 0.85%, will be managed by Pictet Asset Management and focus on environment-oriented investment strategies, the firm says. OppenheimerFunds is responsible for structuring and finding proper distribution platforms to cater to high-net-worth clients.
The environmental strategies will target companies that have relatively low impact over critical natural resources and the firms that contribute to the cause of environmental protection.
“Because of this increasing awareness, we expect companies that contribute to environmental solutions should experience above-average growth over the long term,” said Luciano Diana, head of environmental thematic investing at Pictet Asset Management.
ProShares issues an index bond fund
ProShares has launched the ProShares S&P Bond ETF (SPXB). The fund will focus on the top 1,000 bonds issued in the S&P 500 in terms of their liquidity, as fixed-income investments and index funds continue to deliver stronger-than-average performance.
To ensure the fund selects the most liquid notes, it will only pick bonds that have a maturity of less than 2 1/2 years, and exclude those with a par value of less than $750 million. In particular, most of the bonds are issued by large banks such as Morgan Stanley and Goldman Sachs.
While broad market trends continue to push money into fixed-income ETFs, some investors still hesitate to trust debt instruments that trade like stocks, said Michael Sapir, CEO of ProShare Advisors.