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Portfolio > Portfolio Construction

VanEck Launches Long/Flat Equity Allocation ETF: Portfolio Products

By Emily Zulz

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VanEck launched a new exchange-traded fund with a guided allocation approach designed to help investors manage risk in the U.S. equity market.  

The VanEck Vectors NDR CMG Long/Flat Allocation ETF (LFEQ) seeks to track the Ned Davis Research CMG US Large Cap Long/Flat Index, which is a rules-based index that follows a proprietary model developed by Ned Davis Research (NDR) and CMG Capital Management Group (CMG).

“Many investors make an allocation to U.S. equity for the long-term growth potential, but most may not realize that since 1928 the S&P 500 has spent 70% of the time either in a bear market or recovering from one. That’s not a lot of time spent growing new wealth,” said Ed Lopez, head of ETF product management at VanEck, in a statement. “Your experience really depends on where in the market cycle you start investing.”

According to Lopez, LFEQ provides investors with an ETF solution that offers a systematic approach that seeks to preserve capital by increasing cash when market health is weak, and participate in uptrends with a full allocation to equity.

The model produces trade signals that dictate the index’s equity allocation (100%, 80%, 40% or 0%) and/or cash (U.S. T-bills) allocation.

The index’s equity exposure is provided by the S&P 500 index. Cash exposure is provided by the Solactive 13-week U.S. T-bill Index. The index may rebalance intra-month based on signals from the model. LFEQ will allocate to S&P 500 equities (through ETFs initially) and/or U.S. T-bills.

“Our guided allocation solutions are designed to help fill an important need in investors’ portfolios by responding to market downturns,” Lopez said in a statement.

LFEQ has an estimated gross expense ratio of 0.63%, net expense ratio of 0.59%, and is contractually capped at 0.55% through Feb. 1, 2019.

Direxion Changes Index for Small Cap ETF

Direxion is changing the benchmark index of the Direxion Daily Small Cap Bull 1.25X Shares (LLSC) to the S&P SmallCap 600 Index. The modification will take effect on Dec. 1.

The current index is the Russell 2000 Index. 

“We are very pleased to expand our relationship with Standard & Poors, whose indices have long been among the leaders in the industry,” said Sylvia Jablonski, managing director at Direxion. “The S&P SmallCap 600 Index provides our investors with the most recognizable exposure to the U.S. small-cap equities.”

Lazard Asset Management Launches Equity Franchise Fund

Lazard Asset Management launched the Lazard Equity Franchise Portfolio, which seeks long-term returns by investing in companies that are considered to have an “economic franchise.”

“Economic franchise” means companies that share a combination of a history of stable financial returns, strong earnings forecastability and sustainable competitive advantages. The fund is managed in accordance with Lazard’s existing Global Equity Franchise strategy, which the team has managed since 2013.

The fund is managed by the same investment team that manages the Lazard Global Listed Infrastructure Equity Portfolio, including Bertrand Cliquet, Matthew Landy, John Mulquiney and Warryn Robertson.

ImpactAssets Adds New Private Debt and Equity Impact Investment Options to Its Donor-Advised Fund

ImpactAssets announced the addition of new lower minimum, high-impact investment options within the ImpactAssets Giving Fund, its donor-advised fund.

The funds, available individually with a $25,000 minimum investment, have significantly lower minimums than traditional private debt and equity, which often requires a minimum of $250,000 to $1 million to invest. Donors can also access the funds through the turnkey ImpactAssets Impact Portfolios.

The new options include the Iroquois Valley Farms Blended Private Debt Note, which is a private debt fund that blends two Iroquois Valley Farms note offerings. The long-term note (7.5 year average duration) supports new sustainable farmland investments, and the recently offered Soil Restoration Note offers lower lease rates for its current and future farmers transitioning their farming practices to organic and sustainable practices.

Another new option is the EcoEnterprises Fund III Venture Fund For Nature, which includes private debt, mezzanine and quasi-equity holdings, and will invest in a diversified portfolio of 15 to 18 companies across 8 countries in Latin America.

Also added as a new option is Sarona Frontier Markets Fund III, a private equity fund of funds offering that targets delivery of top-quartile returns by investing growth capital in more than a dozen private equity funds and companies that benefit local communities and the environment.

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