An ETF Newcomer
Toews Corp. is behind the new ETF brand, Agility Shares, and its two initial ETFs are based on strategies the firm has offered in other wrappers, such as mutual funds or separately managed accounts; the firm is known for offering product solutions for advisors. The Agility Shares Managed Risk ETF (MRSK) and the Agility Shares Dynamic Tactical Income ETF (THY) both implement risk management strategies and are actively managed.
MRSK comes with an expense ratio of 0.96%, while THY charges 1.16%. Both list on Cboe Global Markets.
MRSK can invest in equity and fixed income securities, derivatives and other ETFs. It pairs an equity strategy with a fixed income strategy. The former seeks exposure to the S&P 500 Index by investing in futures and ETFs tied to the index with an options overlay intended to reduce volatility and provide income. Meanwhile, the fixed-income strategy targets primarily Treasury investment-grade debt of any maturity or duration as well as futures on Treasury debt. Up to 85% of the portfolio can be allocated to fixed income, its prospectus says.
“Think of it as a dynamically managed approach to trying to avoid losses and participate in market gains,” said Philip Toews, CEO of Toews Corp., adding that he believes this is the first unconstrained tactical ETF to become available to investors.
Meanwhile, THY uses technical analysis to provide income and invests primarily in other ETFs and derivatives tied to high-yield debt. The fund can hedge positions using ETFs and futures, and also seeks to mitigate risk when market conditions turn unfavorable for high-yield debt. In such situations, the fund can invest all of its assets in Treasury securities or cashlike investments, according to the prospectus.
“What our algorithm is designed to do is interpret the early stage of declines in high yield, and we’ll exit into cash equivalents,” Toews said, noting that the fund will exit the market two to four times a year on average.
“What this strategy is designed to do is to allow advisors take exposure to high-yield bonds when otherwise they might not have, because we’re there to attempt to exit and not participate if markets fall,” he added, pointing out that high-yield debt has equity proxy risk, which some advisors may be wary of.
iShares Adds To iBonds Family
BlackRock’s iBonds family has also added a new member. The iShares iBonds Dec 2030 Term Corporate ETF (IBDV) invests in corporate debt maturing in 2030 by mid-December of that year.
The fund carries an expense ratio of 0.10% and lists on the NYSE Arca.
The iBonds family features nearly 35 ETFs that hold fixed income securities maturing in a particular year. Currently, in addition to investment-grade corporate debt, the series covers Treasuries, municipal bonds and high-yield corporate debt.
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