IndexUniverse reported yesterday that Delta Global Advisors filed for three actively managed ETFs.Grail Advisors just launched an actively managed ETF with ticker GVT that broadly targets large cap value. You can read more about it here.
The Delta Global funds are much narrower. The three are;
Claymore Delta Global Infrastructure
Claymore Delta Global Hard Assets
Claymore Delta Global Agribusiness
Generally I don't use broad based funds, where I am not using individual stocks I prefer narrow based funds which makes it easier to create the specific portfolio effect I am looking for. Something like GVT is unlikely to appeal to me but the type of funds listed above might. The problem with broad-based actively managed funds, regardless of whether you can see what they own today like you can with GVT, is that you have no idea what the fund will look like in the future. That makes integrating it into a diversified portfolio very difficult.
The Delta Global funds will always be proxies for some very narrow parts of the market. The agribusiness fund may or may not be a successful proxy for the ag stocks but it is always going to be invested in that space. Anyone who buys that fund can reasonably expect that they are adding materials and a lot of beta to the portfolio.
To the funds themselves or more correctly what the filing says. The infrastructure fund will include utilities, ports, airports, roads, railroads, water infrastructure, telecom build-outs, engineers and basic materials. IndexUniverse concludes that of the several infra ETFs that already exist the Detla Global fund will be most like the PowerShares Emerging Market Infrastructure Fund (PXR) but after looking under the hood of that one I would say that if the Delta fund does in fact regularly hold ports, roads and the like it would look more like the iShares Infra ETF (IGF) which I own for a few clients.
On the first run through the description of the hard assets fund I thought it was saying it would own a combo of stocks related to hard assets and the actual commodities via exchange traded products but after further review that appears not to be the case. This fund will focus on companies involved gold, silver, platinum, palladium, copper, nickel, zinc, oil, nat gas, coal and uranium. That list could expand but no word what they think about thorium, bauxite or tantalum.
The global ag fund will own companies involved with ag commodities, seeds and related chemicals. IndexUniverse says this is similar to Market Vectors RVE Hard Assets ETF (HAP) and I would say the Market Vectors Agribusiness Fund (MOO) would be more like it because HAP has large positions in Exxon Mobil (XOM), Chevron (CVX) and BP.
As the funds have only been filed for it is way too early to know whether they will be successful proxies or not. They may turn out to be so or maybe they can be paired with similar narrow based index funds for some sort of absolute trade--hey that could be an idea for the IndexIQ series of hedge fund ETFs if they ever list.
As a matter of disclosure I write a daily post called Roger's World for GreenFaucet (and am also a minority stakeholder) which one way or another is related to Delta Global. I'm don't know the corporate structure nor do I participate financially in any investment product Delta Global is involved with and perhaps I don't even need to disclose any of this, I don't know.
10 comments:
Good morning Roger...this is off topic...but I have a question...
and thought you might know.
Since GM and AIG are "penny stocks," why aren't they replaced
in the DOW...and when/if they will
be, that would make the DOW go up
quite a bit...right?
thanks
Roger's World?
Sounds like Disneyland for finance buffs. I'll bet the fire-fighting "experience" is quite hot.
Roger,
I like to ask you what criteria do you use to evaluate the administrator's ETF fund.
tx,
Jeff From Milan, Italy
anon 5:30 i used to know this stuff better but they do have plenty of leeway on timing.
Jeff, I'm sorry I don't follow "administrator's ETF fund"
"Administrator" is the company or the person or persons that manage the ETF.
Jeff from Milan, Italy
Jeff, if you mean an actively managed product then there really is no way to evaluate a manager going forward. Will a manager make good decisions a year from now? can only be a guess.
They tell you some of how they do thing and that either resonates with you or it does not. With something that is very narrow based you know there are only certain things the fund can ever own which IMO makes it less risky. With the funds above, even a bad mix is likely (not guaranteed) to look like a similar index fund.
With a fund like GVT it could have been 40% financials in 2007 causing an absolute meltdown much worse than the broad market.
I don't visit your site for the articles - I just come to look at the pictures. Cool stuff as usual - and I am just kidding.
I come to see the dogs. Where are the dogs?
Roger,
Nice post about secular bears yesterday on greenfaucet. Sounds like you count the start of this cycle from 1997, is that correct? If so, it's an interesting take, as many count from 2000. Tie that with those now promoting overweight absolute return, etc. strategies, they make the case we have 5-8 years more to go in this secular bear.
thanks for the comments on the pictures. obviously not all are mine and the ones that are Joellyn took except for Fenway which are pretty good and Miami 2008 which sucked badly.
anon 11:12, I worded that badly, I got hung up on the labels. In hindsight of what has transpired I believe this to be all part of one big event a double something or other with a vast wake of consequences.
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