West Hartford, Conn.-based Validea Capital Management, a new entrant to the ETF space, is the latest firm to throw its hat into actively managed ETFs, which some industry observers say is possibly on the brink of growing dramatically.
The firm has filed paperwork with regulators, seeking permission to launch actively managed ETFs, with its initial proposed fund called the Validea Market Legends ETF, which will invest in equity securities of U.S. companies and foreign equity securities traded in the U.S. as American depositary receipts, according to the filing.
Validea’s filing follows J.P. Morgan’s much-anticipated first foray into ETFs this week, with the launch of a “smart beta” fund called the JPMorgan Diversified Return Global Equity ETF (JPGE). It is an index strategy, yet has a quasi-active tilt designed to outperform market-cap-weighted index funds.
$1 Billion Club
A pair of ETFs with a focus on yield in the equity and fixed-income markets have recently gathered $1 billion in assets, highlighting investors’ continuing search for yield in an environment of ultra-low interest rates spurred on by the Federal Reserve’s tapering of its bond-buying program.
This spring, both the AdvisorShares Peritus High Yield ETF (HYLD | C) and the Global X SuperDividend ETF (SDIV | B-41) surpassed the $1 billion threshold in assets. HYLD invests in high-yield debt securities, while SDIV tracks an equal-weighted index of 100 high-yielding stocks from around the world.
HYLD was launched in November 2010 and has returned 5.9 percent year-to-date. Meanwhile, SDIV launched in June 2011 and has gained 13 percent this year.
Yields on 10-year Treasurys have dropped from 3 percent in January to 2.66 percent on June 17. Meanwhile, the S&P 500 Index, which surged more than 30 percent last year, has eked out a 6 percent gain year-to-date, as slowing economic growth in the U.S. and China as well as tensions in Ukraine and Iraq have slowed the index’s gains.