The Securities and Exchange Commission, by law, gets between 60 and 75 days to review proposed new funds before they can be offered for sale to the public. Each month, Funds in Registration gives you a peek into the new product pipeline. Most funds currently in registration will not become available until January, which is a really bad problem for those trying to market the funds. Because these funds won’t be trading on the first day of the year, they’re not eligible for “year-to-date” returns reports and reporting services such as Morningstar won’t give them “credit” for their 2020 record. In consequence, very few funds want to be in the position of filings this late in the year.
We found 15 funds in the pipeline. Two standout. Daniel O’Keefe, of the Silver-rated Artisan Global Value fund, is slated to manage what appears to be a domestic version of the fund, Artisan Select Equity. Given that Artisan has never had a failed fund launch, that is, no Artisan fund has foundered in its first year and the great majority of their funds have been long-term winners, it’s a promising entry. It was also intriguing to see that launch of the first active, non-transparent ETF, Clearbridge Focus Value ETF. While the strategy discussion is a bit thin, the discussion of the risks engendered by this new form of pooled investment vehicle is clear and illuminating. Finally Fidelity has ramped up the hubris which a series of funds promising to focus on “the disruptors” in each of five arenas.
American Beacon TwentyFour Short Term Bond Fund
American Beacon TwentyFour Short Term Bond Fund will seek income and maybe a little capital appreciation. The plan is to maintain a bond portfolio, primarily investment-grade but up to one-third high yield, with a weighted maturity under three years. The fund will be managed by a team from TwentyFour Asset Management (US) LP. Its opening expense ratio is 0.87%, and the minimum initial investment will be $2,500.
Artisan Select Equity Fund
Artisan Select Equity Fund will seek long-term capital growth. The plan is to build focused portfolio of securities of undervalued U.S. companies across a broad capitalization range. It sounds rather like the domestic version of the manager’s Artisan Global Value fund. It even allows that some non-US stocks, bonds and derivatives might sneak in. There’s an interesting disclosure about trying to keep cash under 10%, but not promising. The fund will be managed by Daniel J. O’Keefe, which two co-managers. Its opening expense ratio has not been released, and the minimum initial investment will be $1,000.
Ashmore Emerging Markets Equity ESG Fund
Ashmore Emerging Markets Equity ESG Fund will seek long-term capital appreciation. The plan is to buy ESG-screened EM equities with a discipline that’s, say, 80% bottom-up and 20% top-down. The fund will be managed by Dhiren Shah. Its opening expense ratio has not been disclosed, and the minimum initial investment will be $1,000.
Clearbridge Focus Value ETF
Clearbridge Focus Value ETF, an actively-managed, non-transparent ETF, seeks long-term capital appreciation. The plan is to build a portfolio of 30-40 undervalued domestic stocks. The fund will be managed by Dmitry Khaykin and Robert Feitler Jr of Clearbridge Investments. Its opening expense ratio has not been disclosed. As one of the first generation of non-transparent ETFs, Clearbridge offered an interesting introduction: “This Exchange-Traded Fund is different from traditional ETFs. Traditional ETFs tell the public what assets they hold each day. This ETF will not. This may create additional risks for your investment. For example, you may have to pay more money to trade the ETF’s shares. This ETF will provide less information to traders, who tend to charge more for trades when they have less information.” Nicely done.
Domini Sustainable Solutions Fund
Domini Sustainable Solutions Fund will seek long-term total return. The plan is to invest in a global, all-cap portfolio of companies with “a commitment to sustainability solutions.” Not entirely sure of how their mission – long-term total return – will play out. In general, total return funds has a strong and defined income component, which might be a commitment to dividend-paying stocks, convertibles, bonds or whatever. None of that is explicit here. The fund will be managed by Michael Finocchi of State Street Global Advisors. Its opening expense ratio is 1.40%, and the minimum initial investment will be $2,500, reduced to $1,500 for various sorts of tax-advantaged accounts.
Fidelity Agricultural Productivity Fund
Fidelity Agricultural Productivity Fund will seek long-term growth. The plan is to invest in companies which help to increase crop yields and/or grow food production amid a backdrop of a growing global population and declining per capita supply of arable land. The fund will be managed by Steve Calhoun. Its opening expense ratio is has not been disclosed, and there is no minimum on the initial investment.
Fidelity Disruption Funds: Automation, Communication, Finance, Medicine, Technology
Fidelity Disruption Funds will seek long-term growth. “Fidelity’s disruptive strategies seek to identify innovative developments that could signal new directions for delivering products and services to customers. Generally, these companies have or are developing new or unconventional ways of doing business that could disrupt and displace incumbents over time. This may include creating, providing, or contributing to new or expanded business models, value networks, pricing, and delivery of products and services.” Each fund will be managed by a large Fidelity team. Its opening expense ratio is has not been disclosed, and there is no minimum on the initial investment.
Fidelity Water Sustainability Fund
Fidelity Water Sustainability Fund will seek long-term growth. The plan is to invest in companies which develop efficiencies, extending the life cycle and/or identifying affordable new technologies to deliver safe, reliable or easily accessible water. The fund will be managed by Janet Glazer. Its opening expense ratio is has not been disclosed, and there is no minimum on the initial investment.
FS Energy Total Return Fund
FS Energy Total Return Fund will seek an attractive total return consisting of current income and capital appreciation. The plan is to invest in the equity and debt securities of firms in the natural resources and energy industry. This will represent the conversion of a closed-end interval fund that’s been in operation since March, 2017. The fund will be managed by a six person team from Magnetar Asset Management, an alternative investment manager with $13 billion in AUM. Its opening expense ratio has not been disclosed, and the minimum initial investment will be $2500.
One Rock Fund
One Rock Fund will seek capital appreciation. The plan is to trust the manager: non-diversified, momentum, tech-heavy, stocks, options, futures, shorting, with the prospect for investing in “short-term opportunistic situations.” There’s also a socially conservative portfolio screen. The fund will be managed by Jeffrey Wrona, he founded Wrona Investment Management LLC in 2019 and serves as the firm’s [INSERT TITLE].” Its opening expense ratio is 1.75%, and the minimum initial investment will be $2000.
Trajan Wealth Income Opportunities ETF
Trajan Wealth Income Opportunities ETF, an actively-managed ETF, seeks current income, conservation of principal and the opportunity for limited capital appreciation. The plan is to invest in domestic preferred securities, income producing fixed income securities, and income producing common stocks. The fund will be managed by Sterling Russell of Trajan Wealth LLC. Its opening expense ratio has not been disclosed.