BEST NEW ALTERNATIVES ETF
WINNER: RPAR Risk Parity ETF (RPAR)
The winner of 2019’s Best New Alternatives ETF award didn’t just get a stamp of approval from the voting committee; it’s gotten the most important stamp of approval of all—from investors. In less than three months on the market, the RPAR Risk Parity ETF (RPAR) won the Best New Alternatives award and picked up $271 million in assets.
RPAR’s multi-asset portfolio has been resonating with investors at a time when concerns about global growth and equity valuations are widespread. The fund diversifies its allocation across equities, Treasuries, Treasury inflation-protected securities and commodities, aiming to “generate positive returns during periods of economic growth, preserve capital during periods of economic contraction, and preserve real rates of return during periods of heightened inflation.”
According to Advanced Research Investment Solutions, the provider of the index that RPAR tracks, risk parity strategies aim to provide investors a more consistent return over time, an approach that differs from traditional portfolio allocation strategies, which tend to be overly dependent on environments that favor strong equity performance.
RPAR’s expense ratio of 0.50% is on the low end for alternatives ETFs, which may make it more appealing to investors.
BEST NEW ASSET ALLOCATION ETF
WINNER: Strategy Shares Newfound/ReSolve Robust Momentum ETF (ROMO)
The Strategy Shares Newfound/ReSolve Robust Momentum ETF (ROMO) is an ETF of ETFs that toggles its portfolio allocation between global equities and short- and midterm U.S. Treasuries.
The mix, which is dictated by its quantitative underlying index, is based on momentum and other trend-following signals in a methodology designed by Newfound Research and Resolve Asset Management. At its extreme, ROMO can be 100% allocated to developed market equities, or 100% tied to Treasuries at any given time, depending on market conditions, using anywhere between one to five ETFs to achieve its goal.
At the end of the day, this is a global equity portfolio accessing U.S., developed and emerging market stocks in an effort to capture equity growth, but one that has a built-in system of de-risking in the face of market drawdowns. ROMO is an effective risk management tool that allows for upside participation, and downside protection.
If timing a launch perfectly were part of this award nomination, in this, too, ROMO is a winner, coming to market last November, not too long before the U.S. stock market’s most dramatic correction in history in early 2020.