Actively managed ETFs have yet to gain the same type of traction as index-based ETFs but that hasn’t stopped product providers from launching new funds.
The Grail American Beacon Large Cap Value ETF (GVT) is the latest active ETF to debut. The fund is supervised by a consortium of managers and it invests in large-company stocks. The top three holdings inside GVT are JP Morgan Chase & Co. (1.56 percent), Chevron (1.44 percent), and ConocoPhillips (1.43 percent).
The large-cap stocks within GVT’s portfolio generally reflect below-average P/E ratios, below-average price-to-book value ratios and above-average dividend yields. The fund’s management team compares these financial metrics to stocks within the Russell 1000 Index, a popular measure of large-company stocks.
One of the main obstacles active ETFs face is their requirement to provide daily disclosure of portfolio holdings. This transparent view of a fund’s portfolio creates a disadvantage and the possibility of front-running by market participants looking to make a quick buck at the fund’s expense. Conventional mutual funds are generally able to avoid this issue because they disclose their holdings quarterly.
GVT is sponsored by San Francisco-based Grail Advisors, and the fund’s annual expense ratio is 0.79 percent. The fund is sub-advised by Brandywine Global Management, Hotchkis and Wiley Capital Management and Metropolitan West Capital Management.
Ron DeLegge is the San Diego-based publisher and editor of ETFguide.com and the radio host of the “Index Investing Show,” which is broadcast nationally on Saturday afternoons and can be heard online at www.indexshow.com. Ron served as an investment and financial advisor for 11 years.