In yet another sign that the growing U.S. legal pot market is no joke, Cambria Investment Management, which manages more than $1 billion in assets, launched the Cambria Cannabis ETF, trading on the Cboe as TOKE.
The new fund is actively managed with a net expense ratio of 0.42%, the company said. TOKE joined a suite of 11 other Cambria ETFs, covering core, tactical and value strategies.
TOKE is Cambria’s “first thematic ETF, which we believe has the potential to be a long-term growth story characterized by structural and behavioral inefficiencies,” Meb Faber, its co-founder and CIO, said in a statement.
But the company warned in its announcement that cannabis companies are subject to “various laws and regulations that may differ at the local and federal level,” and because the use of marijuana is illegal under U.S. federal law “federally regulated banking institutions may be unwilling to make financial services available to growers and sellers of marijuana.” The fund’s investments are concentrated in the cannabis industry and may, therefore, “be susceptible to loss due to adverse occurrences affecting this industry,” it said.
In a prospectus, Cambria said its new fund only invests in publicly-traded cannabis companies that are “primarily listed and traded on a national securities exchange that operates in a jurisdiction where… cannabis-related business activities are legal under the national and local laws of the relevant jurisdiction.”
Cambria also said the fund’s investment advisor “expects that the industry will grow and crossover with other established industries such as tobacco, food, alcohol, medicine, tourism, and personal care” as the “as the cannabis industry matures.
AQR Launches its First Model Portfolios
AQR launched its first model portfolios, the AQR Styles Model Portfolios, now available through Envestnet.
AQR’s five portfolios are designed to provide: “Unique exposure to liquid alternatives”; diversification across asset classes, geography and investment styles; and a factor-based approach to security selection,” the company said in a statement.
Unlike many other model portfolios, which typically rely on traditional return sources, AQR’s portfolios incorporate liquid alternatives, the firm noted. The portfolios leverage AQR’s expertise in factor/styles-based investing, the use of systematic investment themes that are historically sources of long-term returns with low correlation to each other, it said.
Principal Global Investors Introduces Three New Multi-Factor ETFs
Principal Global Investors expanded its factor ETF offerings Wednesday with the launch of three new multi-factor ETFs: Principal U.S. Large-Cap Multi-Factor Core Index ETF (PLC), with a net expense ratio of 15 basis points; Principal U.S. Small-Mid Cap Multi-Factor Core Index ETF (PSM), 20 basis points; and Principal International Multi-Factor Core Index ETF (PDEV), 25 basis points.
The new funds were developed for RobustWealth, the firm’s digital wealth management platform, to provide investors with “innovative strategic beta strategies with relatively low tracking error and competitive fees but will also be available to the general marketplace,” Principal said in its announcement.
They “provide additional choices for our investors when building portfolios,” according to Paul Kim, managing director of ETF Strategy at Principal. “The factor ETFs are index-aware and provide a balance of potential outperformance and limited tracking error to established market-cap weighted benchmarks. They are cost-efficient, comprised of multiple factors, and designed for use as core holdings in portfolios,” he said in a statement.
Mirae Asset Global Investments Launches Cloud Computing, Biotech ETFs
Mirae Asset Global Investments released two thematic index ETFs Thursday that capitalize on the growing trends of cloud computing and biotech. The Mirae Asset Horizons China Biotech ETF and the Mirae Asset Horizons China Cloud Computing ETF are out to “track the individual performance of the twenty largest and most liquid Chinese companies operating in their corresponding sectors,” Frankfurt, Germany-based Solactive said in an announcement.
The ETFs are based on Solactive indexes and each has an expense ratio of 0.68%.
Citing a Gartner forecast in its announcement, Solactive said the global cloud service industry is “expected to grow exponentially with Infrastructure as a Service (IaaS) offerings growing most rapidly.” For 2019, Gartner projected the cloud computing industry will grow 17.5%, resulting in total global revenue of $ 214.3 billion.
Solactive also cited research by Global Market Insights projecting the global biotech industry will grow at a compound annual growth rate of 9.9 %, reaching $775 billion in expected annual revenue in 2024.
DPL Financial Partners, Lighthouse Life to Provide Life Settlement Options to RIAs
DPL Financial Partners teamed with Lighthouse Life Solutions to offer member RIAs the ability to help clients who no longer need life insurance assets sell them for cash, the companies said Wednesday.
RIAs usually work with clients on a comprehensive financial plan and, therefore, may be uniquely situated to help them evaluate whether a policy they took out many years ago is still meeting their needs, they said in an announcement.
“Life settlements are a natural extension of our product lineup,” according to DPL founder and CEO David Lau. “Lighthouse Life provides an innovative approach to life settlements including very fast-turn around in making competitive offers through a simplified underwriting process,” he said in a statement, adding many life settlement providers require a long review process including a medical evaluation.
Lighthouse Life, however, usually conducts just a short telephone interview with the insured and makes an offer within only a few days, not weeks or months later, he noted.
Exchange Traded Concepts to Close, Liquidate Two Bernstein Funds
The Bernstein U.S. Research Fund and Bernstein Global Research Fund will be liquidated on or about August 2, according to Exchange Traded Concepts (ETC), investment advisor for the funds. The decision was made by ETC, in consultation with Sanford C. Bernstein & Co., index provider of the funds, ETC said in an announcement Thursday.
Orders for new creation units were scheduled to close in late July and the last day of trading for the funds’ shares on the Cboe BZX Exchange is to be July 29, it added.
Franklin Templeton’s to Merge Four Funds, Drop Two Others
Franklin Templeton plans to merge four funds and liquidate two others, subject to shareholder approval.
The company is looking to reorganize the $131.4 million Franklin Mutual International Fund into the $15.8 billion Franklin Mutual Global Discovery Fund, effective Feb. 21, 2020, it said at its website.
Franklin Templeton is also planning to reorganize the $408.1 million Franklin Flexible Alpha Bond Fund into the $3.2 billion Franklin Low Duration Total Return Fund, effective Oct. 25, 2019, and to merge the $172 million Franklin Real Return Fund into the $4.5 billion Franklin Total Return Fund, effective Jan. 31, 2020, it said.
In addition, the company has proposed reorganizing the $105.5 million Franklin Select U.S. Equity Fund into the $16.3 billion Franklin Growth Fund, effective Feb. 7, 2020.
In preparation for the proposed reorganizations, the funds that are being merged into others will close to new investors with limited exceptions on Aug. 27 this year, although the dates are subject to change, the company said.
Franklin Templeton also plans to liquidate the $60.9 million Templeton Frontier Markets Fund before its March 31, 2020 fiscal year end and the $63.2 million Franklin Global Listed Infrastructure Fund on Nov. 6, 2019. The latter fund will close to new investors on Aug. 19, 2019 and to all investors Nov. 4, 2019, the company said.
“We evaluate our global product offering on a regular basis to ensure a full alignment with our clients’ evolving needs,” a company spokeswoman said July 22, adding: “At times, this ongoing review may result in the decision to enhance existing products, or the decision to merge or close certain funds when it is deemed to be in the best interest of our shareholders.”
InvestEdge Introduces Enhanced Compliance Monitoring Offering
InvestEdge introduced Compliance Middle Office Management (Compliance MOM), an enhanced compliance monitoring solution offering new capabilities to its compliance monitoring system for advisors.
The new capabilities were designed to decrease compliance costs incurred by wealth managers while maintaining the quality of each conducted review, the company said in an announcement.
Three main features reduce the hours spent by high-earning advisors conducting reviews without sacrificing quality, enabling wealth managers to cost-effectively scale their businesses: Quality Control Process, Task Reassignment and Configurable Review Types, it said.
Quality Control Process is Compliance MOM’s randomization algorithm for quality control that InvestEdge said “takes a page from the manufacturing sector by selecting a random, statistically valid percentage of total reviews for a second review,” significantly lowering the number of second reviews.
Task Reassignment frees up additional time for front-office managers by assigning less sensitive, routine administrative reviews to middle-office employees and Configurable Review Types provides wealth managers with the ability to build multiple review types that can be based on an unlimited number of characteristics including account type, risk or the cycle on which the review should be completed, the company said.
“The randomization algorithms leveraged by Compliance MOM have the potential to revolutionize the way compliance monitoring is conducted industry-wide,” Brian Burns, InvestEdge president, said in a statement. “Each firm must clear the usage of this software with their individual regulator, but the responses we’ve received from our customers and prospective customers so far has been overwhelmingly receptive and positive.”
Check out last week’s portfolio product roundup here: Vanguard Files for International Core Stock Fund: Portfolio Products