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 we survey actively managed funds and ETFs in the pipeline. The “actively-managed” proviso allows us to avoid the pain of reporting on the endless array of ETFs that have commissioned indices of … oh, SPACs plus cannabis or cryptocurrencies plus hotel stocks or stocks also loved by Gamestop investors. (The examples are hypothetical but still representative of the idiocy of the moment.) This month brings 15 new products in the pipeline, most of which will launch in late April or May.
About two-thirds of the month’s filings are new offerings from well-established advisors.
David Sherman, whose RiverPark Short Term High Yield Fund has the highest 10-year Sharpe ratio of any fund in existence, offers up new ultra-short and responsible credit funds for institutional investors, with both funds permitting Mr. Sherman to dabble in SPACs.
Homestead is offering a balanced fund that invests in companies exposed to rural America, which is consistent with the advisor’s history (they started as the retirement system for America’s rural electrification co-ops) and might be an okay idea, if only because it likely avoids exposure to the endlessly alluring, endlessly disastrous meme stocks.
Oaktree is bringing its 10-year-old emerging markets strategy to the masses.
T. Rowe Price is offering up a low-cost, non-transparent ETF to highlight the stock selection skills of its analyst corps.
Arga Emerging Markets Value Fund
Arga Emerging Markets Value Fund will pursue long-term capital appreciation. The plan is to invest in mid- to large-cap value stocks. The fund will be managed by A. Rama Krishna, Takashi Ito, and P. Sujith Kumar. The firm has a sort of behavioral finance bias and an urge to “take the emotion” out of decisions. The expense ratio will be 1.30% and the minimum initial investment will be $5,000. The same prospectus also offers an International Value version of the same fund.
Baron New Asia Fund
Baron New Asia Fund will seek capital appreciation. No real details on the investment discipline except “we’ll do Baron stuff with mid- to large-cap Asian companies.” The fund will be managed by three long-time Baron employees, Michael Kass, Anuj Aggarwal, and Shuyang Bai. The expense ratio hasn’t been disclosed. The minimum initial investment will be $2,000.
CrossingBridge Responsible Credit Fund
CrossingBridge Responsible Credit Fund will seek current income and capital appreciation consistent with the preservation of capital. The plan is to construct an ESG-screened portfolio of … well, stuff: bills, notes, bonds, debentures, convertible bonds, loan participations, syndicated loan assignments, and other evidence of indebtedness issued by U.S. or foreign corporations, governments, government agencies, or government instrumentalities, including floating-rate securities, preferred stock, and fixed income-like equities, convertible bonds, preferred stocks, and SPACS. The portfolio duration will be 24 years. The fund will be managed by David Sherman and Jonathan Berg. The expense ratio has not been disclosed. The minimum initial investment is $50,000.
CrossingBridge Ultra-Short Duration Fund
CrossingBridge Ultra-Short Duration Fund will seek to offer a higher yield than cash instruments while maintaining a low duration. They have the same unconstrained investment universe as their Responsible Credit Fund but an average portfolio duration of 1 year or less. The fund will be managed by David Sherman and Jonathan Berg. The expense ratio has not been disclosed. The minimum initial investment is $50,000.
DGI Balanced Fund
DGI Balanced Fund will seek long-term capital appreciation and current income. It’s a conventional balanced fund designed to be offered to folks living in Puerto Rico. It will be managed by Carlos González. The expense ratio has not been disclosed. The minimum initial investment is $250.
Freedom Day Dividend ETF
Freedom Day Dividend ETF will seek dividend growth. The fund will invest in 30-50 mid- to large-cap companies with the prospect of rising dividends. The fund will be co-managed by Ryan Krueger and Brandon Koepke, though it sounds like Mr. Krueger will be the lead. The expense ratio is 0.39%.
Goldman Sachs Future Planet Equity ETF
Goldman Sachs Future Planet Equity ETF will seek long-term capital appreciation. The managers will invest in a global portfolio of companies that are seeking to solve environmental problems, such as clean energy, resource efficiency, sustainable consumption, the circular economy, and water sustainability. The fund will be managed by Alexis Deladerrière, Raj Garigipati, and Jamie McGregor. The expense ratio has not been disclosed.
Homestead Rural America Growth & Income Fund
Homestead Rural America Growth & Income Fund will pursue long-term total return through capital appreciation and current income. The plan is to invest in the stocks and bonds of companies that have exposure to “rural America.” That’s determined either by the services the companies provide (e.g., agriculture), the population density of the areas where their facilities are located, or their presence in areas served by the National Rural Electric Co-op. The fund will be managed by a team from RE Advisors. The minimum initial investment is $500 but the expense ratio has not been disclosed.
Janus Henderson U.S. Real Estate ETF
Janus Henderson U.S. Real Estate ETF will seek total return through a combination of capital appreciation and current income. The managers will invest in REITs and REOCs with the prospect of committing a bold 15% of assets to Canada. The fund will be managed by Greg Kuhl and Danny Greenberger. Prior to joining Henderson, Mr. Kuhl was Global REITs guy at Brookfield Investment Management and Mr. Greenberger managed a long/short real estate hedge fund. The expense ratio has not been disclosed.
Left Brain Compound Growth Fund
Left Brain Compound Growth Fund will seek long-term capital appreciation. The plan is to invest in stocks and high-yield bonds with “a focused, opportunistic, best ideas strategy.” No real idea of what that strategy is. The expense ratio, after waivers, is 2.0% and the minimum initial investment is $5,000. The fund caught the attention of the folks on our discussion board; we commend, especially, long-term member Lewis Braham’s assessment of the fund.
Oaktree Emerging Markets Equity Fund
Oaktree Emerging Markets Equity Fund will seek long-term growth of capital. In September 2019, Oaktree became a signatory to the United Nations-supported Principles for Responsible Investment and intends to construct an ESG-screened equity portfolio that actively considers the risk of loss that can occur as a result of unpredictable market events and seeks to construct a portfolio that is appropriately diversified across various countries and sectors. Frank J. Carroll and Janet L. Wang will manage the fund. The manager already manages about $8 billion in EM assets for Oaktree. The SICAV version of the strategy modestly trails its peers since inception. Expenses will range from 1.10 – 1.35%, putting aside the extortionate “C” shares that no one (ever) should buy. “A” shares require a $1000 minimum initial investment.
Philotimo Focused Growth and Income Fund
Philotimo Focused Growth and Income Fund seeks current income and long-term growth. The plan is to invest in fixed-income securities, dividend-paying small-cap value stocks, and maybe some REITs. The focus is on companies with special circumstances such as spinoffs and restructuring. The idea is that those companies are systematically mispriced; the fixed income stuff is designed to offer ballast. The fund will be managed by David L. Kanen. The expense ratio will be 1.49% and the minimum initial investment will be $2,500. “Philotimo” is a famously untranslatable Greek word whose surface meaning involves “a lover of honor” but which resonates with notions of dignity, humility, and respect. Just fyi.
Principal International Adaptive Multi-Factor ETF
Principal International Adaptive Multi-Factor ETF seeks long-term growth of capital. The expense ratio has not been disclosed. The plan is to divide companies into factors (value, momentum, quality, and volatility) and then use a quantitative system to overweight some and underweight others. It will be managed by an as-yet-unnamed team from Principal. The same prospectus offers US Large Cap and US Small Cap versions of the same fund.
Putnam Focused Large Cap Growth ETF
Putnam Focused Large Cap Growth ETF will seek capital appreciation. It will be an active, non-transparent ETF that invests in, well, large-cap growth companies. Not much detail beyond that, except to note that it will be non-diversified. The fund will be managed by Richard Bodzy and Gregory McCullough. Messrs. Bodzy and McCullough manage the four-star large-cap, slightly focused Growth Opportunities fund. The expense ratio hasn’t been disclosed.
T. Rowe Price US Equity Research ETF
T. Rowe Price US Equity Research ETF will seek long-term capital growth. The word “Research” in a fund’s name often signals the fact that the firm’s equity analysts will have a disproportionate role in the portfolio’s construct. That seems to be the case here. The plan is to construct a non-diversified portfolio whose size, style, and sector exposures are pretty close to that of the S&P 500 (which controls for a bunch of risk factors), then to add value through superior stock selection within those confines. The fund will be a non-transparent, active ETF managed by a rather large team led by Ann M. Holcomb, Joshua Nelson, Jason B. Polun, and Thomas H. Watson. The expense ratio is 0.34%.