Daily ETF Watch: ETFis Plans Income Blitz

February 10, 2015

During the past few months, ETF Issuer Solutions has put three funds into registration that target various income themes. ETFis is known for helping other firms launch ETFs via its own exemptive relief. Right now, there’s a definite theme emerging among the funds in its hopper.

 

InfraCap Fund

The white-label firm filed for the InfraCap REIT Preferred ETF (PFFR), which will invest in preferred securities issued by REITS. The fund will track an index that was co-developed by the fund’s subadvisor, Infrastructure Capital, and covers preferred securities with more than $75 million in market capitalization. The prospectus noted that the index covered 94 preferred securities from 54 issuers.

 

REITs return 90 percent of their taxable income to their shareholders, and preferred securities give their holders priority in terms of dividends and bankruptcy.

 

Infrastructure Capital already launched an ETF through ETFis in October 2014. The InfraCap Active MLP ETF (AMZA) is another income-generating fund that holds pass-through securities.

 

PFFR will charge an expense ratio of 0.45 percent.

 

Newfleet Fund

Another fund ETFis put into registration is the actively managed Newfleet Multi-Sector Unconstrained Bond ETF, which will be subadvised by an affiliate of Virtus Investment Partners, the firm currently in the process of acquiring ETFis.

 

Newfleet already subadvises the AdvisorShares Newfleet Multi-Sector Income ETF (MINC | C), which has roughly $195 million in assets under management. MINC is a go-anywhere, short-term fixed-income fund; similarly, the fund in registration will also have a wide range of latitude in where it can invest. However, the unconstrained bond fund has no set maturity or duration. It is focused on generating “a high level of current income” and capital appreciation.

 

The proposed fund uses a sector rotation approach that is based on relative valuations between different types of fixed income; it selects securities based on a number of fundamental measures.

 

The fund is slated to launch on the NYSE Arca stock exchange, although the filing did not include a ticker or expense ratio.

 

Tuttle Fund

Most recently, ETFis has filed to launch the Tuttle Tactical Management Multi-Strategy Income ETF, an actively managed fund that will invest in “income producing securities,” according to the fund’s prospectus. It will invest primarily in other exchange-traded products, particularly those that hold fixed-income securities, REITs or dividend-paying securities.

 

The prospectus notes that the fund’s subadvisor Tuttle Tactical Management will apply its beliefs about market trends in managing the fund. The firm believes that intermediate-term trends tend to persist, with asset classes remaining weak if they have been in a weak trend, or strong if they have been in a strong trend; however, in the short term, markets are decidedly inefficient subject to the effects of the media and public fears.

 

The fund can use any of four investment models, including income relative momentum, dividend counter-trend, dividend tactical fundamental earnings and dividend absolute momentum.

 

The filing did not include a ticker or expense ratio, but the fund is slated to list on the Nasdaq stock market.

 

ETFis already has the Tuttle Tactical Management U.S. Core ETF (TUTT) in registration

 

 

 

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