On July 21st, two more actively-managed ETFs began trading, one in the US and one in Canada. AdvisorShares’ long-awaited WCM/BNY Mellon Focused Growth ADR ETF (AADR: 26.30 0.00%) debuted on the NYSE and became the first Active ETF to focus on a portfolio of American Depository Receipts (ADRs), which are the US-listed shares of a non-US company. This came just a few days after AdvisorShares’ also brought to market the Mars Hill Global Relative Value ETF (GRV: 25.15 0.00%). In Canada, Horizons AlphaPro launched its 8th actively-managed ETF on the Toronto Stock Exchange, called the Horizons AlphaPro Global Dividend ETF (HAZ). AlphaPro had filed for this product in Canada only about a month ago on June 15th, 2010, whereas AdvisorShares’ has had AADR under filing with the SEC since September 2009 – a huge difference in time to market, which can likely be explained by the SEC’s ongoing derivatives review that includes actively-managed ETFs.
The Focused Growth ADR ETF (AADR) will look to achieve capital appreciation and beat benchmarks such as the MSCI EAFE and the BNY Classic ADR Index. The fund is sub-advised by WCM Investment Management that currently has $1.4 billion in AUM has historically achieved quite a stellar performance on their international portfolios. The prospectus provides the performance of a “Focused Growth International Composite”, which represents 12 accounts managed by WCM with similar objectives, policies, strategies and risk to those of AADR. This composite has outperformed the MSCI EAFE benchmark in every period, including since inception (12/1/2004) by 7.55%. Another important point to note is that this fund is relatively concentrated in its holdings, with the portfolio managers aiming to hold just 20-30 securities which focus on the technology, health care and consumer staples sectors. AADR will have a total MER of 1.25%, which includes a management fee of 0.75%. Some of its top holdings on the first trading day included China’s Baidu.com (BIDU), Walmart’s Mexican division (WMMVY.O) as well as Nestle (NSRGY).
AlphaPro’s Global Dividend ETF (HAZ) will be managed by Guardian Capital, a 40 year old investment manager that is currently managing $13.4 billion in assets. HAZ will look to achieve regular dividend income with modest capital growth through global equity investments. AlphaPro focused on the international scope of the portfolio, pointing out that most Canadian investors only invest in Canadian-dividend paying stocks – an expected home country bias. Ken McCord, the President of Horizons AlphaPro said, “Canadian companies represent only a small share of the world’s companies. Having global exposure gives an investor the opportunity to buy the world’s best dividend stocks”. It’s a commonly cited fact that a large chunk of stock returns result from dividends. Guardian Capital’s research puts a number to this – 60% of Canadian stock returns and 63% of US stock returns in the last 30 years have come from dividends, figures that cannot be overlooked. The Global Dividend ETF will have a management fee of 0.80% but will also pay 20% “performance fee” on the amount by which the fund outperforms its benchmark – MSCI World Index. The portfolio managers will also look to hedge 50% of the fund’s non-C$ exposure.
Disclosure: No positions in above-mentioned names.
If you haven’t already subscribed to ActiveETFs | InFocus, do it here via Email or via RSS feed!
Disclaimer: Views and opinions expressed on EtfsHub are those of the author alone and do not in any way represent the official views, positions or opinions of the employers – both past or present – of the author in question, or any other institutions and corporations associated with the author. Neither the information nor any opinions contained or expressed above and elsewhere on EtfsHub constitutes or should be construed as a solicitation or offer by EtfsHub to buy or sell any securities or other financial instruments or to provide any investment advice or recommendations. None of the material above and elsewhere on EtfsHub is intended to endorse or promote any company or its products. EtfsHub shall not be liable for any claims or losses of any nature, arising indirectly or directly from use of the information on or accessed through the site. Please see full disclaimers here.
