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Active Alts Launches Active Alts Contrarian ETF: Portfolio Products

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ETF industry veteran Brad Lamensdorf launched the Active Alts Contrarian ETF (SQZZ), a “first-of-its-kind” actively managed ETF that seeks capital appreciation by investing in companies with solid fundamentals that have very large short positions and are subject to a short squeeze.

As a secondary investment strategy, Lamensdorf intends to lend out the hard-to-borrow securities in an effort to earn a stream of monthly income which has the potential to enhance the total return.

“SQZZ is the first ’40 Act fund to employ this novel strategy of seeking to capitalize on ‘short squeeze’ opportunities and generate potential income by getting paid for lending securities,” Lamensdorf, who is the founder and president of SQZZ’s sub-advisor, Active Alts, said in a statement.

The SQZZ ETF will screen securities that are highly shorted to isolate indications of unexpected values.

“Because of changing market conditions or smart management moves, highly shorted securities may have promising fundamentals, creating the potential for a profitable short squeeze,” Lamensdorf explains.

The SQZZ ETF invests in securities with market capitalization of $250 million or greater with at least $1 million a day in trading volume. According to Lamensdorf, the strategy does not have to be fully invested at all times, and it can raise 100% cash if warranted by market conditions, which may allow the fund to outperform in bear markets.

Until a short squeeze materializes, SQZZ investors earn current income by receiving the majority of the interest from banks who are paid by borrowers of the security.

Typically, when securities are loaned from an investor’s margin account, the investor earns nothing and the payment is kept by the bank or broker. However, when SQZZ loans securities, the bank will pay the ETF the majority of the interest it may earn, and that income goes to SQZZ investors in the form of a dividend.

“While securities lending is commonplace, SQZZ will be partnering with major banks to optimize which securities to lend and to get the most income for the fund, which may bolster returns,” Lamensdorf says.

SQZZ’s advisor is Rational Advisors, which received Securities and Exchange Commission approval to issue SQZZ.

Hartford Funds Launches Two Actively Managed Fixed Income ETFs

Hartford Funds announced the launch of two new actively managed fixed income exchange-traded funds: Hartford Quality Bond ETF (HQBD) and Hartford Corporate Bond ETF (HCOR).

Sub-advised by Wellington Management Company LLP, both new ETFs leverage Wellington Management’s deep fixed income research and portfolio management capabilities, while also supplying the potential benefits of ETF transparency, cost and tax-efficiency.

Hartford Quality Bond ETF seeks to maximize total return while providing a high level of current income consistent with prudent investment risk. The fund is a conservative core bond fund with an emphasis on investment grade debt, including U.S. governments and mortgage-backed securities.

Hartford Corporate Bond ETF offers corporate bond exposure through a bottom-up strategy of predominantly investment grade corporate bonds and seeks to provide total return, with income as a secondary objective.

Solactive Adds Two Global Infrastructure Income Indices

Solactive expands its smart beta offering with the launch of two new global infrastructure income indices: the Solactive Global Infrastructure High Income Index and the Solactive Global Infrastructure Income Index.

These indices, which are licensed to J.P. Morgan, offer exposure to an investible basket of infrastructure companies from developed markets screened for high dividend yield and low volatility. The Solactive Global Infrastructure High Income Index offers more focus on dividend income, by only selecting stocks that are expected to pay a dividend in the next quarter.

The Solactive Global Infrastructure High Income Index and the Solactive Global Infrastructure Income Index are calculated as price return and gross total return indices and are denominated in both EUR and USD. The indices are composed of 30 infrastructure-related stocks subject to country and industry diversification filters weighted according to inverse volatility.

VanEck Joins Climate Bonds Initiative Partners Program

Global asset manager VanEck is the latest institutional investor to join the Climate Bonds Initiative Partnership Program to support the development of green finance markets.

“We are pleased to officially join the Climate Bonds Initiative Partners Program and support their very important work towards developing robust standards for the green bond market,” Edward Lopez, Head of ETF Product Management and Marketing with VanEck said in a statement.

Earlier this month, VanEck launched the VanEck Vectors Green Bond ETF (GRNB), the first U.S. listed exchange traded fund that provides access to the fast-growing global green bond market.

–Read last week’s round up here: Merrill Edge Redesigns Mobile App: Portfolio Products


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