Industry Updates

FAANGS, Factor and Rotation

David Tuckwell

Today's listings


Northern Lights Main Sector Rotation ETF (SECT) actively hunts undervalued sectors

Northern Lights is listing an actively managed 'ETF of ETFs' on Bats. SECT, the Main Sector Rotation ETF, will hold other ETFs rather than indexed stocks and try to beat the S&P500 by flipping between different sectors in the economy. According to the prospectus, SECT will analyse the economy and invest in sectors it thinks are undervalued and sell them when they reach a higher value. There is no restriction on which ETFs the fund can invest in. The prospectus also leaves open the possibility of 100% investment in "high-quality short term" debt securities in times of "adverse market, economic, political or other conditions."


First Asset Tech Giants Covered Call ETFs (TXF/B) - FAANGs plus call options

Canadian issuer and covered call specialist First Asset will list an ETF in Toronto that tracks tech giants while also selling covered calls. TXF invests in the 25 largest tech companies in North American on an equal weight basis. To make extra income TXF will sell call options on some of the stocks that it holds. Call options give buyers the option to buy a share at a later date at a previously agreed price.


UBS lists factor ETF in three currencies at once - very neutral, very Swiss

UBS has re-listed its factor ETF in three different currencies - CHF, GBP, EUR - all at once. (USMUFS, USMUFH, USMUFE). The funds, with the unwieldy name The UBS (Irl) ETF plc - MSCI USA Select Factor Mix UCITS ETF, track the same index as USFMD, the US dollar version of the product that was listed in May.

Inexplicably, there is what appears to be another CHF version of the product (USFMDC) listed by UBS that tracks the same index but 10 basis points cheaper. I will try and find out what the difference between USFMDC and USMUFS is.

Today's news from around the web

Want diversity? Buy the whole stock market

There are three things that investors can always do: minimize costs, diversify, and keep the taxman at bay. And now this can be done with a single ETF. How? The Vanguard Total Stock Market Index, which allows investors to buy the whole US stock market. Because it's Vanguard, it's cheap. Because it's an ETF its tax efficient. And because it tracks the whole stock market, it's certainly diverse.

Active managers should accept their demise

Active managers' demise is now inevitable. But rather than face up to it, they've preferred to propagandise against ETFs. Instead of whinging, they should adapt. How? By playing a supporting role to passive investing. Not only would this help the industry set them up for more realistic expectations, it would also free them to actually be active in their management.

Fee war comes to Europe

The fee wars have been exported to Europe via big fund managers. And the stakes are high: Europeans have $2.5 trillion stashed in pension savings, offering a well-fertilised orchard for hopeful issuers.

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