Daily ETF Watch: Crowdsourced Fund Debuts

April 26, 2016

Today a new ETF rolled out on the NYSE Arca using the exemptive relief of Exchange Traded Concepts Trust. The CrowdInvest Wisdom ETF (WIZE) is based on stocks picked by the votes of the users of the CrowdInvest Internet Platform mobile application.

WIZE comes with an expense ratio of 0.95%.

The fund’s underlying index consists of U.S. stocks that have traded at an average daily volume of more than $15 million during the 20 preceding days, the prospectus said. Every month, users of the app can vote to go long or short a stock in the selection universe or to “skip” the stock. The 35 stocks with the most net long votes are selected for the index, with weightings determined by each stock’s number of votes. However, only four stocks can be replaced in each monthly rebalancing.

The methodology has a stopgap if there’s not enough voting activity for the monthly rebalance, defaulting to an equal-weighted portfolio of the largest 35 stocks in the selection universe, the prospectus said.

Just last week, a similar fund drawing on a wider body of opinion launched. The Sprott Buzz Social Media Insights ETF (BUZ) uses a similar concept, but uses sentiment from online news articles, blogs and social media sources to select its stocks.

Event-Driven Fund Filed

J.P. Morgan has filed for another actively managed ETF. The JPMorgan Diversified Event Driven ETF will look to implement a strategy that is popular with hedge funds.

An event-driven strategy basically targets an upcoming event or catalyst in a company’s future and seeks to profit from it. Those scenarios, according to the prospectus, include merger arbitrage, activisim tracking, share buybacks, spinoffs, index arbitrage and post-reorganization equities. The prospectus further says that these different return factors offer low correlations to each other and “traditional” markets.

The fund will invest primarily in developed markets. Not only will it be able to take long and short positions, it will also hedge its foreign currency exposure.

There is currently only one “event-driven” hedge fund ETF, the IQ Hedge Event-Driven Tracker ETF (QED). The index-based fund has been trading for over a year and has less than $2 million in assets under management.

The J.P. Morgan filing did not include a ticker or expense ratio; however, it did note that the fund would list on the NYSE Arca.

Contact Heather Bell at [email protected].

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