Diversified Alts ETF Debuts

Diversified Alts ETF Debuts

Plus, PowerShares adds an aggregate bond fund to its PureBeta lineup.

Reviewed by: etf.com Staff
Edited by: etf.com Staff

The launch of a new liquid alternatives fund today also happens to usher two newcomers onto the ETF stage. The Anfield Capital Diversified Alternatives ETF (DALT) is the first ETF to launch under Regents Park Funds’ exemptive relief, and the first ETF to be subadvised by Anfield Capital Management, an investment management firm founded by former PIMCO employees.

DALT comes with an expense ratio of 1.30% and lists on the Bats exchange, which is owned by ETF.com’s parent company, CBOE.

Regents Park was formed to “take over all of the tasks of creating, launching, operating and marketing mutual funds or other investments,” said President David Ford. DALT is the first investment it will offer.

Meanwhile, Anfield Capital manages money and sells its models on various platforms. Anfield CEO David Young notes that DALT can serve as the alternatives exposure in its models if clients wish to use it for that purpose.

Active Portfolio

The fund is actively managed and covers alternatives from eight to 12 asset class themes, according to Young. DALT is really designed to offer investors an “all in one” alternatives investment. The fund can invest in other ETFs as well as closed-end funds, business development companies and real estate investment trusts.

Young says the firm has been offering DALT’s strategy in other forms, such as an SMA wrapper, for some time, and the strategy has a track record of three years.

The asset class themes into which its exposures fall, according to the prospectus, include companies at the cutting edge of technology in the areas of computing, medical sciences and nanotechnology; companies in frontier markets; companies involved in infrastructure development and resource exploitation; traditional alternative investments such as private equity, private debt, and hedge funds; energy and commodity-related securities; long and short positions in stocks, bonds and derivatives; long- and short-volatility strategies; and various strategies popular with hedge funds such as market-neutral and absolute-return.

The prospectus notes that investments are selected based on the potential for growth balanced by the risks to that growth potential. To that end, the managers rely on a proprietary quantitative methodology to help find that balance, the document notes.

DALT is designed to have a lower correlation to standard fixed-income and equity asset classes. The fund’s subadvisors look at economic conditions, fundamentals, valuation and also market and technical analysis when managing the portfolio.

According to the document, the portfolio typically holds 20-30 equally weighted positions.

PowerShares Launches Agg Bond Fund

Today Invesco PowerShares rolled out an ETF that offers exposure to the aggregate bond space, adding to its offering of plain-vanilla ETFs. The PowerShares PureBeta US Aggregate Bond Portfolio (PBND) tracks the BofA Merrill Lynch US Broad Market Index, which covers investment-grade debt denominated in U.S. dollars.

PBND lists on the Bats exchange and comes with an expense ratio of 0.05%.

Eligible securities can be corporate debt, asset- or mortgage-backed securities and government or quasi-government debt. The prospectus notes that the fund’s underlying index included 13,933 securities as of the end of August.

PBND matches the pricing of the biggest fund in that particular space, the $50 billion iShares Core U.S. Aggregate Bond ETF (AGG). The $36 billion Vanguard Total Bond Market ETF (BND) similarly has a price tag of 0.05%, and the only cheaper fund offering similar coverage is the $4 billion Schwab US Aggregate Bond ETF (SCHZ).

Just last week, PowerShares rolled out a family of five cap-weighted ETFs also carrying the “PureBeta” brand name. Among the funds in that wave of launches was the only other fixed-income ETF in the family, the PowerShares PureBeta 0-5 Yr U.S. TIPS Portfolio (PBTP).

Contact Heather Bell at [email protected]


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