Best New Asset Allocation ETF – 2016
Awarded to the most important ETF launched in 2016 that combines exposure to multiple asset classes. Note: Importance is measured by the overall contribution to positive investor outcomes. The award may recognize ETFs that open new areas of the market, lower costs, drive risk-adjusted performance or provide innovative exposures not previously available to most investors. Only ETFs with inception dates after Dec. 31, 2015, are eligible. ETF must be classified by FactSet as an Asset Allocation ETF to qualify.
- Aptus Behavioral Momentum ETF (BEMO): All or nothing, baby: That’s BEMO’s approach. The fund is either 100% invested in U.S. equities or 100% invested in Treasurys, depending on how the market’s doing. When it’s in equities, it chooses stocks with strong price momentum.
- iSectors Post-MPT Growth ETF (PMPT): You gotta love funds that go full-geek. To quote FactSet, PMPT is an actively managed fund-of-funds that employs a “proprietary optimization algorithm based on post-modern portfolio theory to make allocation decisions between nine different sectors and asset classes.” It seeks to beat the S&P while controlling downside risk “through a quantitative model [that] considers macroeconomic factors such as interest rates, GDP, unemployment rates, inflation rates and money supply.” It charges 1.55% (including assumed fees).
- Premise Capital Frontier Advantage Diversified Tactical ETF (TCTL): TCTL is another fund that a quant could love, using modern portfolio theory and a Black-Litterman-like approach to create a diversified portfolio across U.S. equity and fixed-income ETFs. It also considers intermediate trends in building its portfolio.
- PowerShares DWA Tactical Multi-Asset Income Portfolio (DWIN): DWIN relies on Dorsey, Wright & Associates’ Relative Strength model in an attempt to identify outperforming income assets. The fund can hold U.S. Treasurys, other bonds, preferred stock, MLPs, real estate and high-yield equity, and chooses them by considering price momentum and yield.
- REX Gold Hedged S&P 500 (GHS): Compared with PMPT and TCTL, GHS is simple: It packages long gold and long S&P 500 exposure into a single fund. The result is gold-hedge commodity exposure, capturing the “real” real in real return.
Best New Smart-Beta or Factor ETF – 2016
Awarded to the most important new ETF launched in 2016, regardless of asset class, that uses a quantitative, research-driven approach to attempt to deliver superior long-term risk-adjusted returns. Note: Importance is measured by the overall contribution to positive investor outcomes. The award may recognize ETFs that open new areas of the market, lower costs, drive risk-adjusted performance or provide innovative exposures not previously available to most investors. Only ETFs with inception dates after Dec. 31, 2015, are eligible. ETF must be classified as a Smart-Beta strategy by FactSet to qualify. (Please note: Despite the FactSet categorization, currency-hedged exposures do not qualify.)
- Elkhorn Fundamental Commodity Strategy ETF (RCOM): RCOM uses an active strategy to select commodities that will beat the broader Dow Jones RAFI Commodity Index … without massive tracking difference. It relies on a three-factor model to select those commodities. As a bonus, it’s structured as an open-ended fund, so there’s no K-1.
- Fidelity Dividend ETF for Rising Rates (FDRR): This intriguing new ETF, which selects firms that have strong dividend payments and returns that are correlated with rising rates, was described as “the perfect ETF for today’s market.”
- Fidelity Low Volatility Factor ETF (FDLO): The new fund “tracks an index of large-cap U.S. stocks selected for low volatility of returns and earnings,” to quote FactSet. One nice tweak is that it remains sector-neutral against the broader market, so you’re not making big bets on any one area of the market.
- iShares Edge MSCI Min Vol USA Small Cap ETF (SMMV): Take one of the most popular factor ETFs—USMV—and apply the same theory to the small-cap market. Add in a low fee (0.20% a year). You end up with a pretty nice new ETF.
- Vanguard International High Dividend Yield ETF (VYMI): VYMI won plaudits for offering broad-based exposure to high-yielding companies at a very reasonable fee of just 0.30%. The fund looks not at historical dividend yield, but at expected future yield, to select components.