An active ETF led by Harry Dent is set to launch on Tuesday.
Harry Dent Jr., who has been called "The Sage of Doom and Gloom" among money managers, is about to enter the exchange-traded funds market.
A new ETF first proposed in March has overcome its final regulatory hurdles, the sponsoring firm has confirmed to IndexUniverse.com.
The AdvisorShares Dent Tactical ETF (NYSEArca: DENT) is targeting a Tuesday launch, says Noah Hamman.
"If market volatility picks up, this is the type of strategy that can react quickly," said the chief executive of the Bethesda, Maryland-based start-up firm. "It's not going to be limited in any way how much its managers can trade. And they won't follow any index."
Dent runs HS Dent Investment Management, which is based in Tampa, Fla.
He was well-panned in the media for his book "The Roaring 2000s," which appeared in bookstores just before stocks entered one of the biggest crashes in history.
Dent's latest book is titled, "The Great Depression Ahead." As such, and based on past pessimistic forecasts, Dent has been criticized in some circles as overly downbeat and focused too much on doom-and-gloom forecasts.
Dent, who will work with a co-manager from his firm in running DENT, is a unique and different type of money manager, says Hamman. The team running the new ETF will focus on demographics and take a macro-approach.
“They’re not fundamental and they’re not technical. Dent uses economic data such as spending habits and future earnings potential to identify the most appealing companies given specific demographic trends his team has identified," said Hamman.
He added: "This is a process that starts with Harry’s very non-traditional, top-down approach to looking at the intersection of investing and changing demographics.”
The annual expense ratio of DENT is expected to wind up at 1.56%, which includes the underlying ETF expense ratios along with a 0.95% management fee.
"We’ve got a cap at 150 basis points (or, 1.50%), but that doesn’t include the underlying fund fees. That’s why it’s slightly over 1.5%. But as assets grow, that expense ratio will come down," said Hamman.
He defends such a lofty ER as competitive with other similar tactical open-end funds. "DENT's expense ratio should be far more competitive than what you’d find in the mutual fund space for other tactical, or alternative, strategies," said Hamman.
"The more tactical they are, the more portfolio managers tend to charge – it’s not uncommon to see tactical funds like these charge 2% in an open-end fund structure.”
Dent has been managing a comparable strategy for more than a year in a variable annuity.
The ETF will publish its latest portfolio each day before markets open, says Hamman.
"Of course, we don’t want people to track our investments on a daily basis and try to follow Dent’s strategy. It would be very time-consuming. At the end of the day, if someone is really interested in trying to duplicate his investment process, the most economical and effective way is going to be to invest in this ETF," he said.
(In a recent Q&A, Hamman discussed his belief that fund managers won't shy away from running active ETF portfolios due to regulatory requirements to reveal their portfolios on a daily basis.)
"It seems silly to be concerned that a lot of hedge funds will want to make trades after we make trades," said Hamman. "Transparency will be a net good rather than a competitive disadvantage."