AdvisorShares Files For Two Funds-Of-Funds

October 15, 2010

AdvisorShares lays out plans for duo of fund-of-funds ETFs, one aimed at income, the other at capital growth.

AdvisorShares, the Bethesda, Md.-based boutique adviser known for its actively managed exchange-traded funds, filed with the Securities and Exchange Commission for permission to offer two new fund-of-funds ETFs, one focused on income, the other on capital growth.

The SiM Dynamic Allocation Diversified Income ETF (NYSEArca: DINC) will seek to provide investors with a high level of income and a low level of capital growth by investing in a wide range of underlying ETFs.

The investments will include domestic and global equity- and fixed-income-based funds, exchange-traded notes, exchange-traded currency trusts and closed-end funds, according to the filing. DINC will invest at least 60 percent of its assets in fixed-income funds, the filing said.

By contrast, the SiM Dynamic Allocation Diversified Growth ETF (NYSEArca: DGRO) will invest at least 60 percent of its assets in equity funds, focusing on a broad range of exchange-traded products with the potential for high capital growth.

Strategic Income Management, founded last month by Randy Yoakum, a former executive at Washington Mutual, will serve as the subadviser on the new funds.

Actively managed ETFs have had limited success attracting assets. In addition to AdvisorShares, ETF sponsors WisdomTree, Grail Advisors, Pimco and PowerShares also offer actively managed funds. The funds generally appeal to traders interested in short-term hedges rather than buy-and-hold-type investors.

One active fund that has had reasonable success gathering assets is Pimco’s actively managed Enhanced Short Maturity Strategy Fund (NYSEArca: MINT). Earlier this year, as anxiety over the Greek debt crisis was peaking, MINT’s assets spiked to more than $800 million, according to data compiled by The fund’s assets have since fallen to just under $400 million.

The AdvisorShares filing is the first step in the regulatory process of bringing the proposed funds to market.

AdvisorShares didn’t disclose expense ratios for the proposed funds in its filing.

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