RiverPark Advisors first came into the spotlight as a sub-advisor on four actively-managed ETFs launched by Grail Advisors back Oct 2009. In Feb 2010, RiverPark chose to file with SEC to launch its own actively-managed ETF, on what we suggested may be the start of sub-advisors stepping up and going to market by themselves, by-passing platforms such as those provided by Grail and AdvisorShares. In the original 40-APP filed by RiverPark, they proposed the launch of two new actively-managed ETFs – the RP Short Term High Yield Bond ETF and the RP Energy ETF. On July 29th, RiverPark filed an amended 40-APP with the SEC which included some changes in the proposed “initial funds” that RiverPark is looking to launch. It is proposing to launch the RiverPark Small Cap Growth ETF, the RiverPark Short Term High Yield ETF and the RiverPark/Gravity Long-Biased Fund. The expenses for none of the proposed funds have been disclosed yet.
RiverPark Small Cap Growth ETF
This fund will be of interest to investors that are looking to pursue an actively-managed strategy in the US small-cap sector that has been shown to hold more inefficiencies and hence active return possibilities compared to general large-cap equities which are part of most portfolios. The fund invests in companies that are less than $2.5 billion in market cap and operate in industries that are beneficiaries of long-term secular change in the opinion of RiverPark. RiverPark seeks companies with latent pricing power, expanding free cash flow and a high return on invested capital. As most value managers do, RiverPark looks for the opportunity to invest in its high conviction ideas at times when it believes a company’s prospects are misunderstood by other investors or analysts or the markets react to short-term events that bring the stock price down to attractive levels.
RiverPark Short Term High Yield ETF
For investors looking to gain exposure to high-yield bonds but on the short-end of the maturity spectrum, this proposed ETF will provide that possibility. This fund invests at least 65% of its assets in high-yield securities, typically less than 3 years in maturity. The fund is sub-advised by Cohanzick Management Inc, which is focused on credit-oriented, event-driven and special situations. Cohanzick can also invest up to 25% of assets in securities that exceed 3 years in maturity, but only if it anticipates an event that will cause it to mature within the 3 years time frame. The sub-advisor applies a “bottom-up” approach to security selection, evaluating whether each security is suitable for the fund’s investment objective.
RiverPark/Gravity Long-Biased Fund
This fund provides investors with the possibility of investing in an actively-managed ETF that pursues a US fundamental driven large-cap value strategy, with the possibility of a short overlay of up to 30% of NAV used to help dampen volatility and reduce market exposure. The portfolio will be sub-advised by an investment manager by the name of Gravity which will seek to find undervalued US large-caps relative to their long term prospects. The portfolio managers look at 3 key factors before investing in a security – the soundness of the business model, the quality of management and the price they are being asked to pay for the security. The degree of short overlay implemented will depend on the bearishness of Gravity’s macro analysis and also on Gravity finding companies that are potentially overvalued, discovered through fundamental analysis.
Disclosure: No positions in above-mentioned names.
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