Filings Highlights: Solutions For A Recession

June 27, 2022

The U.S. economy is in turbulent times, with markets becoming increasingly volatile and investors growing more wary. The latest round of ETF filings suggest some issuers are focused on bringing tools to the market that will help address the current economic environment.

Commodities and natural resources feature prominently among the passel of filings and are generally considered to be a potential hedge against inflation. Most prominent was the Neuberger Berman Commodity Strategy ETF, an actively managed fund that uses quantitative and fundamental analysis to take long and short positions in commodity futures. The fund is slated to have an expense ratio of 0.65%.

Invesco also has filed for an actively managed commodity futures ETF, though the fund will hold the commodities in the DBIQ Diversified Agriculture Index Excess Return Index. Those include the corn, soybeans, wheat, Kansas City wheat, sugar, cocoa, coffee, cotton, live cattle, feeder cattle and lean hogs.

Invesco already offers the $2 billion Invesco DB Agriculture Fund (DBA), which tracks the same commodities. However, unlike DBA, investors in the proposed fund will not have to contend with K-1 forms, because it is structured as a 1940 Act fund rather than a commodities pool.

Dividend ETFs 

Amplify has filed for a global natural resources ETF that targets dividend-paying companies as well. The index-based Amplify Natural Resources Dividend Income ETF will invest in commodity-linked companies that derive at least half of their revenue from commodity-linked businesses and have an annual dividend of at least 3%, as well as meeting size and liquidity requirements.

Dividend strategies are considered a typical way to address times of recession, so in addition to the Amplify fund, KraneShares has filed for its own dividend “aristocrats” fund. The KraneShares S&P Pan Asia Dividend Aristocrats ETF invests in the equities of Asia-domiciled companies that have increased their dividends for at least the seven most recent consecutive years while meeting size and liquidity requirements.

Similarly, John Hancock is planning a U.S. dividend fund. The John Hancock U.S. High Dividend ETF will be actively managed and invest in the equities and preferred securities of large- and midcap companies using a systematic approach.

ASX is addressing the current market turmoil by filing for an ETF that is designed to outperform no matter the environment. The ASX All Terrain ETF is an actively managed multi-asset fund that invests in both fixed income and equities with the intention of participating in upside performance while limiting exposure to downside performance. The fund can also hold short positions to achieve its desired exposure.

Finally, iShares has filed for a broader version of its $14 billion iShares JP Morgan USD Emerging Markets Bond ETF (EMB). The iShares J.P. Morgan Broad USD Emerging Markets Bond ETF covers fixed income securities from more countries than does EMB. The asset class is seen as a potential source of differentiated returns relative to the U.S. and offers a much higher yield than the broad U.S. bond market.

 

Contact Heather Bell at [email protected] 

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