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Portfolio > ETFs

Week’s Top Portfolio Products: Altegris’ New RIA Shares; State Street’s Actively Managed ETFs

By Marlene Y. Satter

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New products introduced over the last week include an R share class specifically for RIAs introduced by Altegris and new actively managed ETFs from State Street.

In addition, iShares created a new suite of corporate-credit quality ETFs and Market Vectors brought out a new ETF based on Morningstar research.

Here are the latest developments of interest to advisors:

1) Altegris Launches New R Share Class on Offering Exclusively for RIAs

Altegris announced Tuesday that it will launch a new R share class on May 1 designed exclusively for RIAs seeking to invest in high-quality private placement hedge funds to add diversification to their clients’ portfolios.

R shares, which will be available for four of the firm’s private placement funds, will have a general partner fee of 0.50% per annum. Participation is limited to clients of RIAs in the firm’s RIA referral program who qualify and are suitable for investment in an Altegris private placement hedge fund, and additionally meet the requirements of the R share class specific to each fund.

2) State Street Launches Actively Managed ETFs

State Street Global Advisors, the asset management business of State Street Corp., announced Thursday the launch of the SPDR SSgA Multi-Asset Real Return ETF (RLY), the SPDR SSgA Income Allocation ETF (INKM), and the SPDR SSgA Global Allocation ETF (GAL). The new funds are actively managed by SSgA’s investment solutions group.

RLY seeks to achieve a real return consisting of capital appreciation and current income by utilizing a fund-of-funds structure to invest in multiple exchange traded products representing asset classes, such as inflation-protected securities, real estate, commodities, and natural resources. Its annual expense ratio is 0.70%.

INKM seeks to provide exposure to income and yield-generating investments using a fund-of-funds structure that invests in multiple exchange traded products representing asset classes, such as domestic and international equities, investment-grade and high-yield debt securities, hybrid equity/debt securities (preferred stock and convertible securities), and real estate. Its annual expense ratio is 0.70%.

GAL seeks to provide income, capital preservation and low volatility using a fund-of-funds structure that invests in multiple exchange traded products and an SSgA money market fund representing asset classes such as domestic and international equities, real estate, debt securities, and cash. Its annual expense ratio is 0.35%.

3) iShares Creates Suite of Corporate Credit Quality ETFs

BlackRock Inc. announced Thursday that its iShares ETFs business has launched the first suite of corporate credit quality ETFs. The new ETFs are the iShares Baa–Ba Rated Corporate Bond Fund (QLTB) and the iShares B–Ca Rated Corporate Bond Fund (QLTC). The two new funds are the first ETFs designed to offer precise exposure to specific credit quality segments of the U.S. corporate debt market.

QLTB is the first ETF that offers access to corporate debt issues that typically offer higher yields than A-rated issuers with less credit risk than broad high-yield debt. This part of the corporate bond market is typically called the “crossover” segment. The fund expense ratio is .30%, and the fund is benchmarked to the Barclays Capital U.S. Corporate Baa–Ba Capped Index.

QLTC is the first ETF that focuses exclusively on access to higher-yielding high yield corporate debt issuers rated B–Ca. With the purchase of a single fund, investors can access high-yield bonds rated B to Ca that are broadly diversified across sectors and maturities. The fund expense ratio is .55%, and is benchmarked to the Barclays Capital U.S. Corporate B–Ca Capped Index.

4) Market Vectors Launches Morningstar Wide Moat Research ETF

Market Vectors ETFs announced Wednesday the launch of Market Vectors Morningstar Wide Moat Research ETF (MOAT), which seeks to leverage Morningstar research that aims to identify companies with potential to maintain a competitive advantage for more than 20 years. MOAT seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Morningstar Wide Moat Focus Index. MOAT has an annual gross expense ratio of 0.57% of assets and a net expense ratio of 0.49%, capped until at least May 1, 2013. The cap excludes certain expenses, such as interest.

The Morningstar Wide Moat Focus Index is a rules-based, equal-weighted index that is reconstituted and rebalanced quarterly. To be included in the index, a company must trade on a U.S. exchange, have a market cap of at least $100 million, and meet certain liquidity requirements.

Read the April 23 Portfolio Products Roundup at AdvisorOne.

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