January 2013, Funds in Registration

AdvisorShares Recon Capital Alternative Income ETF

AdvisorShares Recon Capital Alternative Income ETF (PUTS) will seek consistent, low volatility returns across all market cycles. The managers will do that by selling put options on equities in each of the ten sectors of the S&P 500 Index, using a proprietary selection process.  Kevin Kelly and Garrett Paolella of Recon Capital Partners have managed the fund “since 2011” (an intriguing claim for a fund launched in 2013).  Expenses not yet set.

Avatar Capital Preservation Fund

Avatar Capital Preservation Fund seeks to preserve capital while providing current income and limited capital appreciation.  The fund will invest primarily in ETFs and ETNs.  Their investment universe includes short-, intermediate-, and long-term investment grade, taxable U.S. government, U.S. Agency, and corporate bonds, common and preferred stocks of large capitalization U.S. companies and, to a lesser extent, international companies.  In addition, the Fund may use leverage to hedge portfolio positions and manage volatility, and/or to increase exposure to long positions.  The managers use a Global Tactical Asset Allocation model to select investments.  Much of the “investment strategies” strikes me as regrettable mumbling (“The adviser’s investment decision-making process is grounded in the use of comprehensive tactical asset allocation methodology”).  Ron Fernandes and Larry Seibert, co-CIOs of Momentum Investment Partners are co-managers of the fund.  The minimum initial investment $1,000 for regular accounts and (here’s an odd and, I think, unprecedented move) $2500 for tax-qualified accounts such as IRAs and 401(k) plans.  Expenses are not yet set.

Avatar Tactical Multi-Asset Income Fund

Avatar Tactical Multi-Asset Income Fund seeks current income. The fund will invest primarily in ETFs and ETNs.  Their investment universe includes short-, intermediate-, and long-term investment grade, taxable U.S. government, U.S. Agency, and corporate bonds, common and preferred stocks of large capitalization U.S. companies and, to a lesser extent, international companies.  In addition, the Fund may use leverage to hedge portfolio positions and manage volatility, and/or to increase exposure to long positions.  The managers use a Global Tactical Asset Allocation model to select investments.  Much of the “investment strategies” strikes me as regrettable mumbling (“The adviser’s investment decision-making process is grounded in the use of comprehensive tactical asset allocation methodology”).  Ron Fernandes and Larry Seibert, co-CIOs of Momentum Investment Partners are co-managers of the fund.  The minimum initial investment $1,000 for regular accounts and (here’s an odd and, I think, unprecedented move) $2500 for tax-qualified accounts such as IRAs and 401(k) plans.  Expenses are not yet set.

Avatar Absolute Return Fund

Avatar Absolute Return Fund seeks a positive total return in all market environments.  The fund will invest primarily in ETFs and ETNs.  Their investment universe includes short-, intermediate-, and long-term investment grade, taxable U.S. government, U.S. Agency, and corporate bonds, common and preferred stocks of large capitalization U.S. companies and, to a lesser extent, international companies.  In addition, the Fund may use leverage to hedge portfolio positions and manage volatility, and/or to increase exposure to long positions. The percentage of the Fund’s portfolio invested in each asset class will change over time and may range from 0%-100%, and the Fund may experience moderate volatility.  The managers use a Global Tactical Asset Allocation model to select investments.  Much of the “investment strategies” strikes me as regrettable mumbling (“The adviser’s investment decision-making process is grounded in the use of comprehensive tactical asset allocation methodology”).  Ron Fernandes and Larry Seibert, co-CIOs of Momentum Investment Partners are co-managers of the fund.  The minimum initial investment $1,000 for regular accounts and (here’s an odd and, I think, unprecedented move) $2500 for tax-qualified accounts such as IRAs and 401(k) plans.  Expenses are not yet set.

Avatar Global Opportunities Fund

Avatar Global Opportunities Fund will seek maximum capital appreciation through exposure to global markets. The fund will invest primarily in ETFs and ETNs.  Their investment universe includes short-, intermediate-, and long-term investment grade, taxable U.S. government, U.S. Agency, and corporate bonds, common and preferred stocks of large capitalization U.S. companies and, to a lesser extent, international companies.  In addition, the Fund may use leverage to hedge portfolio positions and manage volatility, and/or to increase exposure to long positions.  The managers use a Global Tactical Asset Allocation model to select investments.  Much of the “investment strategies” strikes me as regrettable mumbling (“The adviser’s investment decision-making process is grounded in the use of comprehensive tactical asset allocation methodology”).  Ron Fernandes and Larry Seibert, co-CIOs of Momentum Investment Partners are co-managers of the fund.  The minimum initial investment $1,000 for regular accounts and (here’s an odd and, I think, unprecedented move) $2500 for tax-qualified accounts such as IRAs and 401(k) plans.  Expenses are not yet set.

Investors Variable NAV Money Market Fund

Investors Variable NAV Money Market Fund will seek to maximize current income to the extent consistent with the preservation of capital and maintenance of liquidity by investing exclusively in high-quality money market instruments.  The fund is managed by Northern Trust Investments, though no individuals are named. The expense ratio is 0.35% and minimum initial investment is $2500, $500 for an IRA and $250 for accounts established with an automatic investment plan. They are simultaneously launching three other variable-NAV money market funds: Investors Variable NAV AMT-Free Municipal Money Market, Variable NAV U.S. Government Money Market and Variable NAV Treasury Money Market Fund.

LSV Small Cap Value Fund

LSV Small Cap Value Fund will seek long-term growth by investing in stocks with a market cap under $2.5 billion (or the highest market cap in the Russell 2000 Value Index, whichever is greater).  Their goal is to find stocks which are out-of-favor but show signs of recent improvement.  They use a quant investment model to match fundamentals with indicators of short-term appreciation potential.   The fund will be managed by Josef Lakonishok, Menno Vermeulen, and Puneet Mansharamani.   Lakonishok is a reasonably famous academic who did some of the groundbreaking work on behavioral finance, then translated that research into actual investment strategies.  His LSV Value Equity Fund (LSVEX) turned $10,000 in $22,000 since launch in 1999; its average peer would have earned $16,200 and the S&P, $14,200. The minimum initial investment is a bracing $100,000. The expense ratio is 0.85%.

SMI Dynamic Allocation Fund

SMI Dynamic Allocation Fund seeks total return through a “dynamic asset allocation investment strategy” in which it invests in the most attractive three of six major asset classes:  U.S. equities, international equities, fixed income securities, real estate, precious metals, and cash.  They’ll look at momentum, asset flows and historical volatility, among other things. The asset allocation and equity sleeve is managed by a team from Sound Mind Investing (Mark Biller, Eric Collier and Anthony Ayers).  The two Sound Mind funds tend to below average returns but low volatility. The fixed income sleeve is managed by Scout Investment’s Reams Asset Management Division.  The Reams team (Mark M. Egan, Thomas M. Fink, Todd Thompson, and  Steven T. Vincent) are really first-rate and were nominated by Morningstar as a 2012 Fixed Income Manager of the Year. The minimum initial investment is $2500. Expenses not yet set.

SPDR SSgA Large Cap Risk Aware ETF

SPDR SSgA Large Cap Risk Aware ETF seeks to provide competitive returns compared to the large cap U.S. equity market and capital appreciation.  I’ll let the managers speak for themselves: “invests in a diversified selection of equity securities included in the Russell 1000 Index that [they] believes are aligned with predicted investor risk preferences. . .  During periods of anticipated high risk, the Adviser will adjust the Portfolio’s composition to be defensive and may increase exposure to value companies.” (The assumption that “value” and “low-risk” are interchangeable seems, to me, to be debatable.)   In low risk periods, they’ll emphasize riskier assets and in periods of moderate risk they’ll look more like the Russell 1000.  The fund is non-diversified.  The fund will be managed by Gary Lowe, Simon Roe and John O’Connell, all of SSgA. Expenses not yet set.

SPDR SSgA Risk Aware ETF

SPDR SSgA Risk Aware ETF seeks to provide competitive returns compared to the broad U.S. equity market and capital appreciation.  I’ll let the managers speak for themselves: “invests in a diversified selection of equity securities included in the Russell 3000 Index that [they] believes are aligned with predicted investor risk preferences. . .  During periods of anticipated high risk, the Adviser will adjust the Portfolio’s composition to be defensive and may increase exposure to large cap and/or value companies.”  In low risk periods, they’ll emphasize riskier assets and in periods of moderate risk they’ll look more like the Russell 3000.  The fund is non-diversified.  The fund will be managed by Gary Lowe, Simon Roe and John O’Connell, all of SSgA. Expenses not yet set.

SPDR SSgA Small Cap Risk Aware ETF

SPDR SSgA Small Cap Risk Aware ETF seeks to provide competitive returns compared to the small cap U.S. equity market and capital appreciation.  I’ll let the managers speak for themselves: “invests in a diversified selection of equity securities included in the Russell 2000 Index that [they] believes are aligned with predicted investor risk preferences. . .  During periods of anticipated high risk, the Adviser will adjust the Portfolio’s composition to be defensive and may increase exposure to value companies.”  In low risk periods, they’ll emphasize riskier assets and in periods of moderate risk they’ll look more like the Russell 2000.  The fund is non-diversified.  The fund will be managed by Gary Lowe, Simon Roe and John O’Connell, all of SSgA. Expenses not yet set.

Stone Toro Relative Value Fund

Stone Toro Relative Value Fund will seek capital appreciation with a secondary focus on current income by investing, primarily, in US stocks.  Up to 40% of the portfolio may be invested in ADRs.  The managers warn us that “The Fund’s investment strategy involves active and frequent trading.”  They don’t say much about what they’re up to and they use a lot of unnecessary quotation marks when they try: “The Adviser employs a unique proprietary process, the Relative Value Process (the ‘Process’), to identify ‘special investment value’.”  The Process is managed by Michael Jarzyna, Founding Partner and CIO of Stone Toro.  He spent a year or so (2008-09) as Associate Portfolio Manager of Blackrock Value Opportunity Fund. From 1998-2006, he managed the technology portions of Merrill Lynch’s small and mid-cap value funds. The minimum initial investment is $1,000.  The expense ratio is 1.57%.

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