ActiveETFs | InFocus

Date Launched: Oct 2, 2009

Links: Website, Prospectus, White Paper

Investment Strategy:

(RFF: 24.56 0.00%) is the third of a group of Grail Active ETFs that looks to invest at least 80% of its net assets in stocks of financial services companies in order to achieve long-term capital appreciation. These companies are those that derive a large portion of their revenues from the financial services industry. RiverPark, the fund’s sub-advisor, identifies stocks through fundamental research and looks for attractive valuations. The fund aims to invest in mid-large cap companies (ie. $2 – $150 billion market cap). Under adverse market conditions, the fund is allowed to be in 100% cash, if necessary. RFF is benchmarked against the S&P Financials Index.

Portfolio Managers:

RiverPark, the sub-advisors for RFF, provide day-to-day portfolio management services for the fund. RFF is managed by a team of RiverPark professionals, led by Morty Schaja and Mitchell Rubin:

Mitchell Rubin, Team Lead – Mitchell Rubin is the Chief Investment Officer of RiverPark and is a general partner of RiverPark Partners, a long/short equity fund. He held several executive positions previously at Baron Funds.

Morty Schaja, Team Lead – Morty Schaja is the Chief Executive Officer of RiverPark. From Feb 1991 – Mar 2006, he worked in various positions Baron Capital leading up to his position as President and COO. He is also a general partner of RiverPark Capital, a registered investment advisor that managed long only and long/short funds.

The Numbers:

Expense Ratio – Capped at 0.89% till Aug 31, 2010 (by contractual agreement)

Average Bid-Ask Ratio – n/a

Average Volume – 2,042 shares

Analysis:

Positives –

- Just like the managers of other RiverPark ETFs, RFF’s portfolio managers, Conrad and Mitchell, bring with them the experience of managing funds previously at Baron Funds.

Negatives –

- Having been in the market for 4 months now, RFF has attracted hardly any investor interest. Being one of the pioneers in the Active ETF space, alongside PowerShares, has not helped them at all and as a result RFF still only has a market capitalization of $2.46 million. And the lack of liquidity discourages investors even more, with hardly any volume to support trading activity.

- RFF’s expense ratio is also at the higher end of the range for actively-managed equity ETFs and with the contractual agreement ending this year, there is no guarantee that the expenses won’t rise beyond 0.89%.

Performance to date vs S&P Financials Index:

Disclosure: No positions in above-mentioned names.
 
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