Calamos Rolls Out Actively Managed Growth ETF - ETF News And Commentary


Calamos - better known for its lineup of mutual funds - is now looking to impress investors with its stock picking skills in the ETF world.  On July 14, 2014, the issuer launched the Calamos Focus Growth ETF under the symbol of CFGE. Notably, the investment firm has so far garnered recognition in growth investing style and active management .

CFGE in Focus  

The issuer looks to attain long-term capital appreciation of a highly diversified U.S. equity portfolio targeted at the large market capitalization level. This is done by investing mainly in companies possessing at least $1 billion in market capitalization, as per the filing . The newly launched ETF is an actively managed product, and does not look to follow the performance of any particular index.

There is a provision that the fund can invest up to 25% of assets in foreign securities and equity securities issued by other investment companies. It is also worth noting that the fund managers will take into account earnings and revenue growth, returns on invested capital and debt-to-capital ratio of the specific company as well as the macroeconomic backdrop while selecting the stocks for the portfolio.

Apple, Google and Facebook are currently the top three holdings of the fund. However, the product has considerable concentration risk with Apple accounting for as much as 8.56%, while the other two account for 6.50% (Google) and 5.66% (Facebook) of the portfolio. At present, the portfolio contains about 35 stocks while it charges 90 bps in fees per year.

How might it fit in a portfolio?

At a time like this when investors are growing increasingly wary about the sustainability of the high-growth and high-momentum stocks as well as rising rate risks, the need for an active strategy is undeniable. The global market indicates heightened volatility in the stock market even after the S&P 500 is hovering at multi-year highs.

As per Bloomberg , the fear gauge index or The Chicago Board Options Exchange Volatility Index (VIX) soared 17% recently, representing the highest level since April. European market has also seen similar sways thanks to Portuguese banking concerns.

To add to this, geo-political tensions and political crisis in different parts of the world disturbed the revival of the U.S. economy in Q2 at any moment (read: Portugal ETF: Canary in the Coal Mine for Europe Investing? ).

On the other hand, after sliding 2.9% in Q1, the U.S. economy perked up in Q2 on better economic indicators. Corporate earnings also look to be in better shape than what we saw in the preceding quarter. Goldman Sachs also lifted its S&P 500 price target to 2050 for 2014 from 1900.

So, it would be wise to bet on U.S. stocks at the current level but in a lower risk manner. Large caps will offer certain precautions as these are less inclined to volatility and an active approach will help investors to cash in on any sudden jump or fall in stocks (read: PowerShares Launches New Active Multi-Strategy ETF ).

ETF Competition

In terms of direct competition, CFGE should feel quite relieved as the space is pretty underexplored. There are only 15 actively managed non-leveraged U.S. equity ETFs available in the market, as per the data from .  
Within that bunch, Madrona Forward Domestic ETF ( FWDD ), Columbia Large Cap Growth ETF (RPX), Enhanced U.S. Large-Cap ETF (IELG), and Columbia Select Large Cap Growth ETF (RWG) can give competition to CFGE (read: 5 Best Performing Active ETFs ).

In fact, apart from FWDD, the other trio charges less than CFGE.  However, with the overall space accounting for just about $1.46 billion in market cap, we do not expect this meager competition to create many hurdles for CFGE, especially given the issuer's expertise in active management (read: J.P. Morgan Debuts JPGE, a Smart Beta ETF ).

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CALAMS-FOCUS GR (CFGE): ETF Research Reports

MADR-FWD DOMEST (FWDD): ETF Research Reports

ISHRS-ENH US LC (IELG): ETF Research Reports

COLUMBIA LCG (RPX): ETF Research Reports


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , ETFs

Referenced Stocks: CFGE , FWDD , IELG , RPX , RWG

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