Adaptive Converts 3 Mutual Funds To ETFs

November 09, 2021

Adaptive Investments expanded its lineup of actively managed ETFs with the conversion of three of its mutual funds. The AI Quality Growth ETF (AQGX), the RH Tactical Outlook ETF (RHTX) and the RH Tactical Rotation ETF (RHRX) debuted on the NYSE Arca Monday.

 

Ticker Fund Starting Expense Ratio Post-Waiver Expense Ratio*
AQGX AI Quality Growth ETF 0.97% 1.48%
RHTX RH Tactical Outlook ETF 1.37% 2.59%
RHRX RH Tactical Rotation ETF 1.44% 2.28%

*Waivers expire on Sept. 30, 2022

 

All three funds select securities using metrics analyzed by the firm’s in-house financial model. AQGX aims to invest in 30 to 40 companies expected to outperform industry peers, while RHTX and RHRX will invest in other ETFs across the asset class spectrum based on specific investing factors.

The funds also reserve the right to use options and inverse and leveraged ETFs to manage risk. All three of the funds are fully transparent.

AQGX was converted from the Adaptive Fundamental Growth Mutual Fund, while RHTX and RHRX retain their mutual fund names. The three funds bring a total of $110.7 million in mutual fund assets into the ETF wrapper upon conversion.

As mutual funds, AQGX generated returns of 13.53% in the past 12 months after taxes, while RHTQ lost 0.31% and RHRX has gained 0.69% in the same time period.

The S&P 500 has gained 32.37% during the same time frame.

With their post-waiver expense ratios above 1% and 2%, the newly launched funds are among the most expensive in the U.S.-listed ETF universe, which has traditionally been dominated by index funds charging single-digit basis point fees. RHTX is now the 11th-most expensive ETF on the market, while RHRX is the 17th-most expensive.

The costs for the mutual-fund-adapted ETFs sit between their respective Class A and Class C expense ratios.

Adaptive already completed the conversion of its Adaptive Alpha Opportunities ETF (AGOX) in May, and its prospectus suggests that it is preparing to convert its high-income and hedged multi-asset mutual funds at some point in the future.

Adaptive did not respond to a request for comment Monday afternoon.

Contact Dan Mika at [email protected], and follow him on Twitter

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