Checking in on the “Grail Fund”

by on May 12, 2009 | Updated May 14, 2009 | ETFs Mentioned:

Last week, Grail Advisors launched the Grail American Beacon Large Cap Value ETF (GVT), the first true actively-managed ETF to hit the market. Prior to the launch of the fund, there was rampant skepticism regarding the ability of GVT to solve the dilemma posed by the stringent disclosure rules placed on ETFs. Although it has only been trading for one week, the initial market reaction to the Grail Fund appears to be positive.

GVT closed on its first day of trading at $26.02, and was recently trading near that level. Its performance has mirrored that of the Russell 1000 Value Index (its benchmark) in the brief period since its inception. More telling of the market’s reception perhaps are the volume of the fund (average of about 5,000 shares per day) and the premium to NAV (0.7% as of Monday). The volume isn’t huge (in fact it indicates there are still some liquidity issues), but it’s a lot better than the worst case scenario. And the fact that GVT is trading at a premium indicates that investors aren’t shying away from this style of fund. 

Finally, it’s interesting to note that GVT has been living up to its name as an actively-managed fund. As presented below, the ETF’s top five holdings have already changed dramatically since inception, indicating the fund managers’ hands are not completely tied by the disclosure requirements.

GVT Holdings