Daily ETF Watch: Calamos Sets 1st Launch

Daily ETF Watch: Calamos Sets 1st Launch

The shop known for convertibles sets launch for its first ETF, an active equity strategy.

Reviewed by: Hung Tran
Edited by: Hung Tran
The shop known for convertibles sets launch for its first ETF, an active equity strategy.

(An earlier version of this article made reference to smart-beta funds. Calamos has obtained regulatory permission to market active ETF strategies, and the first fund is an active ETF and not a "smart beta" fund. We regret the error).

ETF newcomer Calamos ETF Trust, a Naperville, Ill.-based money manager, on Monday, July 14 is launching its own brand of active ETFs wrapper at a time when issuers are trying to slice and dice cap-weighted indexes to extract every ounce of beta they can from markets that are still reaching new highs.

Calamos plans to roll out the Calamos Focus Growth ETF (CFGE), which will invest primarily in growth-oriented companies with market capitalizations of more than $1 billion that the firm believes offer the best opportunities for growth, according to the regulatory filing.

The fund may also invest up to 25 percent of its assets in foreign securities, and may invest in equity securities issued by other investment companies, including money market funds. It has a net expense ratio of 0.90 percent, or $90 for every $10,000 invested.

Calamos, a mutual fund shop with a reputation in convertible securities, is one of many firms lining up in the hopes of offering up active ETF wrappers as the ETF industry continues to grow. The notion of active to some in the ETF industry can extend to new-generation "smart beta" indexes. For example, J.P. Morgan last month launched its quasi-active smart-beta fund, the JPMorgan Diversified Return Global Equity ETF (JPGE | F-19). But the Calamos strategy is actively managed.

The launch comes at a time when the S&P 500 Index is up more than 6 percent year-to-date after it shot up more than 30 percent in 2013. Gains in stocks have been fueled by an accommodative Federal Reserve that continues to keep interest rates at ultra-low levels. Additionally, the U.S. economy has shown steady, if slow, growth, since it began to recover from the market crash of 2008-2009.

To date, the ETF market has expanded to 1,618 funds, with more than $1.868 trillion in assets under management, according to ETF.com’s data screener. But less than 1 percent of those assets are in actively managed strategies.

News of Calamos’ plans to launch its first ETF on July 14 came courtesy of a Nasdaq communique.


ETF.com Data Screener

The dog days of summer are settling in, and with them comes a lag in filings for new ETFs.

We wanted to take this moment to reflect back on a busy first half of the year and take note of some of the more interesting offerings to hit the shelves this year, including a gold ETF that promises investors an exchange of their shares for the precious metal.

Year-to-date, there have been 107 new ETFs/ETNs launched, compared with 79 for the same period in 2013 and 127 in 2012, according to ETF.com’s data screener.

Although the amount of is year’s new crop of funds is a drop-off from 2012, issuers were seemingly more discerning about their product launches, including the highly anticipated smart-beta fund, the JPMorgan Diversified Return Global Equity ETF (JPGE | F-19), J.P. Morgan’s maiden ETF.

JPGE is an index strategy, yet has a quasi-active tilt designed to outperform market-cap-weighted index funds. The bank made clear in an interview with ETF Report that its presence in the world of ETFs will build on its reputation as an active asset manager.

Also noteworthy among the launch traffic is the Merk Gold Trust (OUNZ), currency expert Axel Merk’s physical gold ETF, which launched on May 16 on the NYSE Arca. The fund, in registration for almost two years, competes with well-established funds, including the SPDR Gold Shares (GLD | A-100) and the iShares Gold Trust (IAU | A-100).

Merk’s latest offering’s marketing niche lies in the fact that it will allow smaller retail investors in the trust to take delivery of physical gold in exchange for their shares. In comparison, physical redemptions in gold bullion ETFs such as GLD have been limited to authorized participants in lots of 100,000 shares, which is $12.5 million worth of gold bars at GLD’s current price of $126 a share.

Another smart-beta fund, the Cambria Global Value ETF (GVAL), brainchild of Mebane Faber, has been a hit with investors, garnering $53 million since launching in March. The fund invests in companies from countries that Cambria has identified as having undervalued equity markets, including Brazil, Spain and Russia.

“Many of these markets have declined 40, 60, 80 percent at some point, so you’re investing in what many would consider to be terrible markets,” said Faber, in a recent interview with ETF.com.


Hung Tran is a former staff writer for etf.com.