Amid the calm trading environment, several issuers beefed up their product lineups last week, including the launch of the first ever city-based fund; the Nashville Area ETF offers a truly unique strategy that takes the theme of “targeted exposure” to the next level. VelocityShares also rolled out an intriguing Risk-Weighted ETF that offers a new take on the increasingly popular low volatility strategy. First Trust also snuck in a launch last week when it rolled out the Managed Futures Strategy Fund (FMF) on Friday [see The Cheapest ETF For Every Investment Objective].
FMF: Many Trading Strategies, One Ticker
This new ETF marks First Trust’s entrance into the world of Hedge Fund ETFs, which has grown considerably in the last few years as investors grow more comfortable with utilizing the exchange-traded product wrapper to access alternative asset classes. FMF looks to achieve positive returns that exceed the performance of its benchmark, the Morningstar Diversified Futures Index; this actively-managed fund works to achieve its objective be generating returns that are not directly correlated to broad market returns by employing long, short, and flat futures trading strategies to a basket of commodities, currencies and equities [see Cheapskate Hedge Fund ETFdb Portfolio].
Given its active nature, FMF’s portfolio is bound to change over time, but it will generally look to maintain roughly half of its total assets allocated to commodity futures, a quarter to equity futures, and the remaining across currencies.
Meet The Competition
The new First Trust ETF will go head-to-head with an existing WisdomTree ETF, the Managed Futures Strategy Fund (WDTI, B), which has accumulated nearly $140 million in assets under management since launching at the start of 2011. By comparison, FMF charges the same 0.95% expense fee as WDTI, which will make it more challenging for the newcomer to establish a presence in the space [see also 3 Active ETFs Beating The Market].
FMF warrants a closer look from anyone looking to add alternatives exposure to their portfolio; historically, managed futures trading strategies have offered the potential to improve your portfolio’s risk-adjusted returns over the long-haul.
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Disclosure: No positions at time of writing