AdvisorShares continued a busy week on the product development front, following up the launch of three Madrona funds earlier in the week with the debut of the Meidell Tactical Advantage ETF (MATH). The newest actively-managed ETF will be sub-advised by American Wealth Management, and will be structured as an ETF-of-ETFs that invests in other exchange-traded products.
MATH will offer exposure to a number of different asset classes, shifting exposure based on the management team’s view of various risk factors. MATH will rely on a quant-based formula build around the concepts of relative strength and moving averages that strives to select asset classes that exhibit characteristics of long-term “durable” trends. The methodology will utilize price-to-velocity metrics in its analysis of various asset classes [read more in the Active ETF Center].
Under The Hood
|Foreign Stocks||0% – 50%|
|Large Cap Stocks||0% – 50%|
|Mid Cap Stocks||0% – 30%|
|Small Cap Stocks||0% – 30%|
|Commodities||0% – 20%|
|Currencies||0% – 10%|
MATH will buy risky assets (i.e., equity and commodity ETPs) when the underlying model indicates attractive growth opportunities in these asset classes. When the outlook for these assets deteriorates, the fund will replace commodities and equities with fixed income ETPs or cash. The fund will maintain a relatively large range of allocations to various types of equities, and will also maintain the ability to establish a position in currency products. The portfolio may shift from a 100% allocation to stocks and commodities to 100% fixed income and cash, depending on various economic indicators and pricing metrics [see list of active ETFs].
Given the wide range of asset classes covered, MATH could be appealing as a core holding for investors who believe the underlying methodology will create an efficient strategy of balancing exposure across stocks, bonds, and natural resources. The focus on relative strength and moving averages as inputs into the fund’s proprietary model might also result in a strategy that appeals to risk averse investors looking to minimize downside volatility in prolonged bear markets.
The new ETF will charge a management fee of 1.20%, and will have a bottom line expense ratio of 1.35%.With the launch of MATH, the AdvisorShares ETF lineup now includes ten actively-managed products. The company now has more than $300 million in aggregate AUM [see Seven Wildly Successful Active ETFs].
Diversified Portfolio ETFs
MATH is one of several products in the Diversified Portfolio ETFdb Category that offers exposure to a variety of different asset classes. While many of the products in this category are linked to indexes that maintain a constant style, such as aggressive (AOA) or conservative (AOK), there are a number that employ more flexible techniques to determine allocations to various asset classes. AdvisorShares also offers the Cambria Global Tactical ETF (GTAA), which spreads holdings across a number of different types of securities base on a quant-based methodology. PowerShares offers a pair of ETFs (PAO, PCA) based on indexes maintained by RiverFront Investment Group that shift exposure across various asset classes based on expectations for financial markets. [see Active ETFs: FAQs] .
Disclosure: No positions at time of writing.