January 2021 IssueLong scroll reading

Funds in Registration

By David Snowball

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. Fund companies anxious to have a new fund up and running by December 31st need to have it in the hopper by the third week in October at the latest. This month brings a far more sedate pace of launches with 14 new products in the pipeline, most of which will launch in February.

That said, the new funds are being offered by some absolutely A-tier advisers, which might explain their willingness to launch at unconventional times. Among the advisers are DoubleLine, MacKay, Seven Canyons, Touchstone Sands, and WCM. My early bet would be that all of these funds will be gathering a lot of attention in the next couple of years. The teams really are good. Read on!

Ashmore Emerging Markets Corporate Income ESG Fund

Ashmore Emerging Markets Corporate Income ESG Fund will seek to maximize total return. The plan is to pursue “debt instruments of all types” issued by corporations that have survived a fairly vigorous ESG screen. The “all types” proviso encompasses junk bonds, EM corporate bonds, and other spicy fare. The fund will be managed by a team from Ashmore. Its opening expense ratio has not been disclosed, and the minimum initial investment for “A” shares will be $1,000.

DoubleLine Multi-Asset Trend Fund

DoubleLine Multi-Asset Trend Fund will seek total returns in excess of its benchmark over a full market cycle. The plan is to “use derivatives, or a combination of derivatives and direct investments, to provide a return (before fees and expenses) that approximates the performance of the BNP Paribas Multi-Asset Trend Index.” The fund will be managed by Jeffrey Gundlach and Jeffrey Sherman, DoubleLine’s CEO and deputy CIO, respectively. Its opening expense ratio is not stated, and the minimum initial investment for “N” shares will be $2,500.

Formidable ETF

Formidable ETF, an actively-managed ETF, seeks long-term capital appreciation. The plan is to follow a “multi-strategy approach, pursuing a range of investment strategies across asset classes and styles, while applying a dynamic risk management framework that seeks to provide returns uncorrelated to those of broad equity markets.” Themes, trends, and signals appear to be involved. The fund will be managed by folks from Formidable Asset Management and Toroso Asset Management. Its opening expense ratio has not been disclosed. The same prospectus covers a SMID cap and thematic ETFs as well.

Impact Shares Affordable Housing MBS ETF

Impact Shares Affordable Housing MBS ETF, an actively-managed ETF, seeks current income. The plan is to hold a portfolio comprised of investment-grade mortgage-backed pass-through securities issued or guaranteed by U.S. government agencies. The “impact” part is that at least 80% of the fund’s assets will go to mortgage-backed securities for mortgages made to “minority families, low-income families, and/or families that live in persistent poverty areas.” De facto, investing in such funds (there are only a few) makes housing more affordable for the groups targeted. The fund will be managed by Community Capital Management. Its opening expense ratio is 0.30%.

IQ MacKay ESG Core Plus Bond ETF

IQ MacKay ESG Core Plus Bond ETF, an actively-managed ETF, seeks total return. The plan is to create an ESG-screened but otherwise unconstrained intermediate-term global bond fund. The fund will be managed by a four-person team from MacKay Shields LLC, part of New York Life, which manages about $144 billion. Its opening expense ratio has not been disclosed.

JPMorgan Short Duration Core Plus ETF

JPMorgan Short Duration Core Plus ETF, an actively-managed ETF, seeks total return consistent with the preservation of capital. The plan is to principally invest in traditional fixed income sectors (for example, investment-grade corporate bonds) while also having the flexibility to allocate its assets to extended sectors such as high yield bonds and foreign and emerging markets debt. The fund will be managed by Steven Lear and Cary Fitzgerald. Its opening expense ratio has not been disclosed.

Seven Canyons Small Cap Growth Fund

Seven Canyons Small Cap Growth Fund will seek long-term growth of capital. The plan is to build a portfolio of “exceptional small companies, purchased early in their corporate life cycle, that have the wherewithal to become exceptional large companies.” The adviser uses the same bottom-up process in their other two funds to identify sustainable growth candidates. The fund will be managed by Spencer Stewart and Andry Kutuzov. Seven Canyons Advisors spun off from Wasatch, which its founder also founded. This is its first post-Wasatch new offering. Its opening expense ratio is 1.35%, and the minimum initial investment will be $2,000.

Touchstone Sands Capital International Growth Fund

Touchstone Sands Capital International Growth Fund will seek long-term capital appreciation. The plan is to apply Sands’ successful quality + growth model to create a portfolio of 25-40 international stocks. Sands screens for ESG factors that might “affect the sustainability of a company’s value‐creation potential.” The fund will be managed by Sunil Thakor and Ashraf Haque. Its opening expense ratio is 0.98%, and the minimum initial investment for Y shares will be $2,500.

USCF Midstream Energy Income Fund

USCF Midstream Energy Income Fund will seek high current income. The plan is to invest in midstream energy companies, such as those which own pipelines. In general, such firms collect steady income as they stand between fossil fuel producers and end-users and collect fees that are set by contract. The fund will be managed by Miller/Howard Investments. Its opening expense ratio has not been disclosed.

WCM China A-Shares Growth Fund

WCM China A-Shares Growth Fund will seek long-term capital appreciation. The plan is to identify a group of reasonably valued industry leaders using a bottom-up approach that seeks to identify companies believed to have above-average potential for growth. The fund will be managed by Michael Tian and Yan Gao of WCM Investment Management. Its opening expense ratio has not been disclosed, and the minimum initial investment will be $1,000.

WCM Focused International Opportunities Fund

WCM Focused International Opportunities Fund will seek long-term growth. (Are you surprised?) The plan is to seek companies that are industry leaders with sustainable competitive advantages; corporate cultures emphasizing strong, quality, and experienced management; low or no debt; and attractive relative valuations. That’s the same mandate as its siblings, just applied to “a small number of issuers.” The fund will be managed by a team led by Gregory Ise and Tamara Manoukian. Its opening expense ratio has not been disclosed, and the minimum initial investment will be $1,000.

WCM International Long-Term Growth Fund

WCM International Long-Term Growth Fund will seek long-term growth. (Are you surprised?) The plan is to seek companies that are industry leaders with sustainable competitive advantages; corporate cultures emphasizing strong, quality, and experienced management; low or no debt; and attractive relative valuations. The fund will be managed by a team led by Sanjay Ayer, a former Morningstar analyst. Its opening expense ratio has not been disclosed, and the minimum initial investment will be $1,000.

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About David Snowball

David Snowball, PhD (Massachusetts). Cofounder, lead writer. David is a Professor of Communication Studies at Augustana College, Rock Island, Illinois, a nationally-recognized college of the liberal arts and sciences, founded in 1860. For a quarter century, David competed in academic debate and coached college debate teams to over 1500 individual victories and 50 tournament championships. When he retired from that research-intensive endeavor, his interest turned to researching fund investing and fund communication strategies. He served as the closing moderator of Brill’s Mutual Funds Interactive (a Forbes “Best of the Web” site), was the Senior Fund Analyst at FundAlarm and author of over 120 fund profiles. David lives in Davenport, Iowa, and spends an amazing amount of time ferrying his son, Will, to baseball tryouts, baseball lessons, baseball practices, baseball games … and social gatherings with young ladies who seem unnervingly interested in him.