ETF Watch: Northern Lights Debuts Funds

Mutual fund firm launches its first ETFs.

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

Today Northern Lights is launching its first ETFs, a family of five products that carry the QuantX brand and that are advised by Blue Sky Asset Management. The index-based ETFs include four risk-managed funds and another with a volatility-based strategy.

The five funds are listing on the Bats exchange. Bats Global Markets is the owner of ETF.com.

The new ETFs include the following:

The QuantX Risk Managed Growth ETF (QXGG) comes with an expense ratio of 1.22%. It invests in other ETFs covering domestic and international markets based on a proprietary selection methodology that is intended to provide more exposure to the top-performing markets and minimize exposure to poorly performing markets. The methodology is also designed to manage portfolio risk by switching as much as 100% of the portfolio to ETFs that invest primarily in cash, cash equivalents and fixed income when indicators suggest market risk is elevated.   

The QuantX Risk Managed Multi-Asset Income ETF (QXMI) comes with an expense ratio of 1.12% and tracks an index designed to provide current income. The fund can invest in other ETFs as well as exchange-traded notes, MLPs and REITs that fall into the following income categories: duration or interest-rate-sensitive income; credit risk income; equity risk income; real asset income; and option income. As with QXGG, the methodology is designed to provide greater exposure to the best-performing markets and less exposure to the worst-performing markets.

The QuantX Risk Managed Real Return ETF (QXRR) comes with an expense ratio of 1.22% and has a similar methodology to QXMI. However, the fund is intended to provide exposure to real assets rather than provide current income. It invests in vehicles that offer access to asset classes with high correlations to inflation, such as real estate and commodities, as well as inflation-hedged fixed-income securities such as TIPS.

The QuantX Risk Managed Multi-Asset Total Return ETF (QXTR) comes with an expense ratio of 1.51% and covers a wide range of asset classes via investments in ETFs, closed-end funds, MLPs and REITs. The securities in the portfolio provide access to foreign and domestic equities, real estate, commodities and fixed income, among other areas. It seeks to provide exposure to the best-performing markets and to limit exposure to the worst-performing markets while switching to cash, cashlike investments and fixed income when risk is rising.  

Finally, the QuantX Dynamic Beta US Equity ETF (XUSA) invests in stocks and comes with an expense ratio of 0.59%. It tracks an index derived from the Russell 1000 Index and seeks to provide maximum exposure to stocks with the most estimated upside volatility. It switches to companies with the lowest estimated downside volatility when market signals suggest the fund is exposed to too much risk.

While XUSA’s index is reconstituted monthly, all of the other funds’ indexes are reconstituted daily. Rebalancing is done for all of the indexes on an as-needed basis to stay within predetermined weighting thresholds.

"The smarter risk exposure and asymmetric risk profile of our new Dynamic Beta US Equity ETF (XUSA) give investors a powerful new tool for capturing market upside and mitigating potential downside, while the risk-managed approach built into the Risk Managed suite of funds—QXMI, QXGG, QXRR and QXTR—is truly dynamic, managing risks before they have the chance to wreak havoc on a portfolio. We're thrilled to be bringing our quant-based approach to the world of ETFs," said Keys Tinney, Blue Sky’s CEO and founder.

Contact Heather Bell at [email protected].

 

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