ETF Pipeline: AdvisorShares, Accuvest Team Up on Global ETF

by on May 12, 2011 | ETFs Mentioned:

Momentum continues to build behind actively-managed ETFs, as one of the most successful issuers of these products has stuffed yet another offering into an already full pipeline of ETF ideas. In a recent SEC filing, AdvisorShares detailed plans for the Accuvest Global Opportunities ETF (ACCU), which would be sub-advised by Accuvest Global Advisors. The proposed fund would seek long-term capital appreciation in excess of global equity benchmarks such as the MSCI All Country World Index.

ACCU would be structured as an “ETF-of-ETFs,” investing primarily in other exchange-traded products to accomplish its objectives. According to the filing, Accuvest ranks countries on a monthly basis using a proprietary country ranking model in order to determine their relative attractiveness. Using ETFs that offer exposure to the most attractive countries, ACCU will be constructed with five or six country ETFs that offer targeted exposure. Noting that the proposed fund would be “benchmark agnostic,” the SEC filing notes that the only constraint is that no single country ETF may receive more than a 25% allocation at purchase price [also see our Country Lookup Tool].

Accuvest’s country ranking methodology involves an analysis of some 40 factors on a monthly basis. Included are factors classified within the Fundamental, Momentum, Risk, and Valuation factor groups. In order to be eligible for inclusion in the ETF, countries must be part of the MSCI All Country World Index, have a liquid ETF that tracks the performance of the equity market, and have reliable monthly country-level data that can be used as inputs to the analytical framework behind the fund.

Stiff Competition

ACCU will compete with a number of products offering exposure to global equity markets. The most popular option in the Global Equities ETFdb Category is Vanguard’s FTSE All-World ex-U.S. ETF (VEU), which has nearly $8 billion in assets. No expense ratio was specified for ACCU; the average for the Global Equities ETFdb Category is 0.52%, with products available for as little as 20 basis points annually [Handicapping The Active ETF Race].

AdvisorShares currently offers six actively-managed ETFs, three of which utilize the ETF of ETF structure. The company is also expected to launch three ETFs in partnership with Madrona Funds at some point in the second quarter [see all the AdvisorShares products here].

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Disclosure: No positions at time of writing.