New Filings Include Pure Play AI ETF

New Filings Include Pure Play AI ETF

Additional filings cover nontraded REITs and Israeli bonds.

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Reviewed by: Heather Bell
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Edited by: Heather Bell

A number of notable filings for new ETFs have been made in the past 30 days that are worth highlighting. The proposed funds break new ground in some ways, and could signal themes to watch for in the industry in 2023.  

AI Fund 

In a move that seems inspired by the buzz around ChatGPT, Roundhill Investments filed for the Roundhill Generative AI & Technology ETF (CHAT). The actively managed exchange-traded fund will invest in companies involved in artificial intelligence through their business activities. It won’t be the first such fund to cover this space if it launches.  

There are multiple funds offering exposure to the artificial intelligence category; however, most of them include “robotics” in their name as well as “artificial intelligence.”  

CHAT is more of a pure play on artificial intelligence, aligning it more with funds like the $120.4 million Global X Artificial Intelligence & Technology ETF (AIQ) and the $6.8 million Wisdom Tree Artificial Intelligence and Innovation Fund (WTAI), which do not have a specific focus on robotics. The “generative” in CHAT’s fund name is descriptive of the technologies that have or facilitate the ability to “generate original content,” according to the fund’s prospectus.  

The filing is significant because Roundhill is also behind the most successful metaverse ETF currently trading in the U.S. The $421.4 million Roundhill Ball Metaverse ETF (METV) dwarfs all of its competitors, none of which have assets of more than $20 million. The main question raised by the filing is whether Roundhill will be able to repeat its prior success, this time in the artificial intelligence space.  

New Twist on REITs 

Toroso Investments and Armada ETF Advisors are planning a first-of-its-kind actively managed ETF that will try to capture the performance of a group of public REITs that do not trade on stock exchanges but are sold to accredited or institutional investors.  

The Non-Traded REIT Fund Tracker ETF will do this by investing in publicly traded REITs and mortgage-backed securities that exhibit similar sector and geographical characteristics as well as similar portfolio quality, term structure and valuations to the basket of nontraded REITs. The fund prospectus further notes that because publicly traded REITs tend to have less leverage than their nontraded counterparts, the resulting portfolio will come with less leverage than the category it is mimicking. 

Toroso and Armada previously teamed up a year ago to launch the Residential REIT Income ETF (HAUS), which is one of the few ETFs to cover residential real estate.  

Israeli Bonds 

Defiance is planning to launch an Israeli bond ETF, which would be the first such product to market. The Defiance Israel Bond ETF (CHAI) will track the BlueStar USD Israel Bonds Index. It will primarily hold investment-grade bonds denominated in U.S. dollars, though its portfolio can include corporate bonds denominated in Israeli shekels if certain conditions are met.  

Among the other bond categories covered by the index are those issued by the Israeli government or its related entities and debt issued by companies domiciled in Israel or whose equities are included in the BlueStar Israel Global Index.  

AllianceBernstein Plans Equity ETF 

AllianceBernstein entering the ETF market in 2022 was significant, as it marked the debut of yet another mutual fund issuer known for its active management strategies with its own ETFs. The two fixed income ETFs the firm rolled out in September already have combined assets upward of $360 million. The firm recently filed for its first equity ETF. 

The AB US Large Cap Strategic Equities ETF will invest in large cap U.S. companies that generally fall within market cap range covered by the S&P 500 index, though the fund will give priority to companies with more than $5 billion in market cap.  

The prospectus says the fund will use fundamental and quantitative research for the purposes of security selection and risk management. The document also notes thatthe fund will be managed by AllianceBernstein Senior Vice President Shri Singhvi.  

Dimensional Files ‘Vector’ ETF 

Dimensional Fund Advisors has filed for the Dimensional US Large Cap Vector Equity ETF, which currently has a projected expense ratio of 0.22%. The fund will target the U.S. large cap equity segment and invest primarily in companies exhibiting both a lower relative price and higher profitability.  

 

Contact Heather Bell at [email protected] 

Heather Bell is a former managing editor of etf.com. She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.