Aptus Capital Advisors rolled out its fourth ETF product, aiming to create hedged exposure to international equities as an alternative to a fixed income environment it believes is anemic for returns.
The International Drawdown Managed Equity ETF (IDME) launched on the Cboe Global Markets Friday, with an expense ratio of 0.65%.
The actively managed fund’s strategy is to hold equities in international companies that Aptus determines have a combination of dividend yields and growth opportunities greater than the broader market. At the same time, it uses options to hedge non-U.S. equity indexes, ETFs or against the VIX to defend against a major correction.
The fund is the international complement to the Aptus Drawdown Managed Equity ETF (ADME), which was launched in 2016 and applies the strategy to the domestic market.
Aptus Managing Member JD Gardner told ETF.com that his firm believes international equities are currently undervalued because of the promise of growth, and that in turn is more likely to produce better yields than a fixed income product.
“More and more advisors are realizing that fixed income just doesn't make a ton of sense as an asset class that can generate returns moving forward,” he said.
ADME currently has $249.8 million under management and has year-to-date returns of 11.72%, but is 14 basis points more expensive than IDME. That’s due to Aptus deciding to gain exposure to foreign equities through holding ETFs rather than stocks or ADRs, Gardner notes.