AdvisorShares, the Bethesda, Md.-based ETF sponsor known for its actively managed funds, today rolled out an ETF that’s designed to protect investors from losses in bearish market cycles through a trend-following strategy that own equities in good times and short-term debt instruments when markets are in turmoil.
The AdvisorShares Global Alpha ' Beta ETF (RRGR) is an actively managed global asset allocation fund that blends single equities and funds in a mix that tries to outperform financial benchmarks such as a 60 percent/40 percent allocation to the S'P 500 Index and the Barclays Capital Aggregate Bond Index.
The fund, which comes with a net annual expense ratio of 1.40 percent that includes a waiver of 0.32 percent, is diversified across industry sectors and countries in a top-down investment style that first looks at the big economic picture before narrowing its focus to sectors, countries and ultimately individual stocks.
Finally, the strategy is designed to mitigate volatility and risk, and looks at variables such as the 200-day moving average of the S'P 500 Index and the bond market’s yield curve to determine when to add a defensive position to preserve capital.
That protection is obtained through high-quality debt securities and money market instruments either directly or through ETFs, and can represent as much as 100 percent of the portfolio, according to the most recent prospectus the company filed with U.S. regulators.
While RRGR is an equities fund, and global in scope, the trend-following strategy recalls the RBS US Large Cap Trendpilot ETN (TRND), which flips to equities or short-term Treasurys exposure based on whether the S'P 500 is above or below its 200-day moving average for at least five days.
TRND has gathered more than $74.5 million since its launch in December 2010. The fund has also done well relative to the broad stock market, tagging on gains of 7.4 percent year-to-date, while the S'P 500 Index has gained 6.6 percent in the same period. It costs 1.00 percent when it’s exposed to stocks and 0.50 percent when it switches to Treasurys exposure.
RRGR joins AdvisorShares’ other global tactical ETF, the $78.5 million Cambria Global Tactical ETF (GTAA), which also allocates across global sectors, but includes bonds, real estate, commodities and currencies, as it looks to generate absolute returns while protecting capital on the downside.
Roger Nusbaum, chief investment officer of Phoenix-based Your Source Financial is RRGR’s portfolio manager. He is known for the “Random Roger” stock market blog and for his contributions to theStreet.com.
RRGR is AdvisorShares’ 15 th ETF.
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