VanEck Debuts Long/Flat Asset Allocation Fund

October 05, 2017

Today VanEck rolled out a fund tracking an index strategy provided by Ned Davis Research. The VanEck Vectors NDR CMG Long/Flat Allocation ETF (LFEQ) balances its exposure to the stocks of the S&P 500 and U.S. Treasury bills based on a proprietary model.

The fund lists on the NYSE Arca and comes with an expense ratio of 0.59%.

According to VanEck Head of ETF Product Management Ed Lopez, “Many investors make an allocation to U.S. equity for the long-term growth potential, but most may not realize that since 1928, the S&P 500 has spent 70% of the time either in a bear market or recovering from one. That’s not a lot of time spent growing new wealth."

LFEQ helps to solve this problem by increasing its exposure to cash in the form of T-bills when the market is weakening, and fully allocating to equities when the market is improving in order to participate in uptrends, he adds.

Index Methodology

The ETF’s underlying index, the Ned Davis Research CMG US Large Cap Long/Flat Index, can allocate 100%, 80% or 40% to the stocks of the S&P 500 based on market signals, with any leftover weight allocated to cash as represented by the securities of the Solactive 13-week U.S. T-bill Index.

It uses trend-following and mean-reversion indicators at an industry group level to determine the overall direction of the market and whether the trade signals are bearish or bullish. The resulting score determines the weighting of the equity portion of the portfolio.

The model is updated daily and the index can be rebalanced more than once a month if required based on market indicators.

The prospectus further notes that LFEQ will invest in other ETFs tracking the S&P 500 to achieve its equity allocation until it acquires enough assets that it makes sense to invest directly in the equities in the S&P 500.

AdvisorShares Closing Gartman Funds

AdvisorShares has announced it will be closing two more of its funds in October. The AdvisorShares Gartman Gold/EURO ETF (GEUR) and the AdvisorShares Gartman Gold/Yen ETF (GYEN) are both set to shut down on Oct. 13.

Both funds launched in February 2014. GYEN has accumulated roughly $15 million in assets, while GEUR has about $13 million.

Both offer exposure to gold via their respective currencies, essentially replicating the effects of buying gold in yen or euros. To do this, the funds generally short futures on their respective designated currencies while holding long positions in gold futures. Both ETFs are actively managed.

2017 A Record Year

Once completed, the pair of closures will bring AdvisorShares’ total number of fund shutdowns to seven for year-to-date 2017. In total, 11 funds from three different issuers are set to close during the month of October.

Across the industry, with most of the final quarter to go, nearly 135 are expected to shut down by the end of the year, based on the number of announced closures, breaking the record of 128 ETF closures set in 2016.

AdvisorShares currently offers 18 actively managed funds with a total of $1.1 billion in assets under management. The largest of those is the AdvisorShares Newfleet Multi-Sector Income ETF (MINC), which has $268 million in AUM.

Contact Heather Bell at [email protected]

 

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