ETF Watch: AdvisorShares Debuts Small Cap ETF

July 07, 2016

Today AdvisorShares launched the actively managed AdvisorShares Cornerstone Small Cap ETF (SCAP), which targets U.S. equities that are smaller than the largest company in the Russell 2000 Index but are not smaller than the bottom-ranked 200 stocks in the index. Essentially, it creates a selection universe of approximately 1,800 equities.

The fund is subadvised by Cornerstone Investment Partners and comes with an expense ratio of 0.90%

SCAP generally equal-weights individual securities within sectors, but also seeks to be within 15% of each sector’s weight within the Russell 2000 Index.

The fund’s strategy is based on the idea that the market is slow to react to companies with improving fundamentals and that the mispricing can be exploited. The prospectus notes that the fund seeks to target companies demonstrating financial flexibility, balance sheet strength and a record of upwardly revised forward-looking estimates from analysts or exceeding analyst expectations. It ranks companies in its investable universe based on these three criteria. Primarily, SCAP seeks to participate in upside volatility and steer clear of downside volatility. 

Amplify Makes Active YieldShares Filing

A recent filing from Christian Magoon’s Amplify ETFs represents the third fund the firm has filed for under its YieldShares brand. The YieldShares CWP Dividend & Option Income ETF will be an actively managed fund that will implement a covered-call options strategy in order to provide current income and capital appreciation, according to its prospectus.

Subadvisor Penserra Capital Management will primarily handle the fund’s day-to-day operations, while Capital Wealth Planning (CWP), the second subadvisor, will provide the fund with model portfolios for Penserra to execute. CWP’s in-house strategy is an Enhanced Dividend Income Portfolio that selects its components from the S&P 500 based on their likelihood of consistent dividend growth, and also writes covered-call options on those components.

The fund is slated to list on the Bats Exchange, which owns ETF.com. However, the filing did not include an expense ratio or ticker. The prospectus notes that the fund’s annual turnover could exceed 100%.

The original YieldShares ETF is the YieldShares High Income ETF (YYY), which invests in an index of closed-end funds and has nearly $93 million in assets under management. It originally launched in 2013, well before Amplify made its debut. The firm has also filed for the YieldShares Prime 5 Dividend ETF, which has not yet launched.

Additional Updates

  • The Calamos Focus Growth ETF (CFGE | D-78) will see its last day of trading on Aug. 1. The actively managed fund has roughly $26 million in assets and made its debut in July 2014. Its expense ratio of 0.91% for a portfolio of large-cap domestic securities was likely a significant barrier to gathering assets.

 

 

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