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Three Actively Managed ETFs to Consider Right Now
4/12/2013 3:05:00 PM
Actively managed ETFs remain just a sliver of the overall ETF universe.
There are 1,445 ETFs and ETNs trading in the U.S., but a mere 58 are actively managed, a figure that equals just four percent of the U.S. exchange traded products universe, according to ETF Trends .
And when it comes to the conversation about actively managed ETFs, one fund stands above all others: The PIMCO Total Return ETF (NYSE: BOND ). Colloquially referred to as the "Bill Gross ETF," BOND has attracted over $4.8 billion in assets in less than 14 months of trading.
That is an impressive haul and to be fair, BOND has delivered with a gain of 11 percent in the past year. The downside of BOND's dominance and popularity is that some other actively managed ETFs worthy of investors' consideration have almost been doomed to under the radar existences. That should not be the case as the following funds prove.
AdvisorShares Cambria Global Tactical ETF (NYSE: GTAA ) The Cambria Global Tactical ETF is managed by Mebane Faber's Cambria Investment Management and a simple way of looking at this ETF is that it is an ETF fund of funds. Meaning all of GTAA's roughly 65 holdings are other ETFs.
That strategy leads to a broad mix of asset classes as foreign stocks, emerging markets equities, U.S. stocks and U.S. real estate names all receive double-digit allocations within the fund. U.S. bonds and commodities combine for another 23 percent of the fund's weight. GTAA's top holdings include the Vanguard REIT Index ETF (NYSE: VNQ ), SPDR Dow Jones International Real Estate ETF (NYSE: RWX ) and the iShares MSCI Belgium Investable Market Index Fund (NYSE: EWK ).
GTAA has a gross expense ratio of 1.41 percent, according to AdvisorShares data . On that note, it should be highlighted that GTAA's fees will be reduced as the funds attracts more assets . The ETF has been a solid performer gaining 8.5 percent in the past year and 4.1 percent year-to-date.
WisdomTree Emerging Markets Corporate Bond Fund (NASDAQ: EMCB ) The WisdomTree Emerging Markets Corporate Bond Fund had the misfortune of debuting around the same time that BOND came to market. While the two funds obviously have vastly different objectives, EMCB's place in the actively managed ETF conversation arguably suffered, at least initially. That is starting to change for the better.
As it should. EMCB has attracted over $128 million in assets under management and has returned more than seven percent since its debut. Notably, EMCB does not represent increased credit risk for corporate bond investors as nearly 61 percent of the ETF's holdings are rated BBB. Another 11.3 percent are rated AA or A.
Country allocations here are important and this is where EMCB has the potential to deliver for investors. EMCB devotes a combined 42.3 percent of its weight to Mexico and Russia, two corporate bond markets currently viewed as attractive by some portfolio managers.
And for what it is worth, DoubleLine's Jeffrey Gundlach said on Thursday emerging markets corporates are the best area of investment-grade fixed income at the moment, Barron's reported .
EMCB's effective duration is 6.03 years with an average yield to maturity of 4.44 percent.
WisdomTree Asia Local Debt Fund (NYSE: ALD ) By the standards of actively managed ETFs, the WisdomTree Asia Local Debt Fund is a behemoth with over $547 million in AUM. The fund is deserving of those assets and has proven as much. With the recent upgrade by Fitch Ratings of the Philippines to investment-grade territory, all of ALD's constituent countries have investment-grade ratings from at least one major ratings agency.
Additionally, although ALD has "Asia" in its name, it should be pointed out this not a pure play emerging markets fund. Rather, ALD does a fine job of mixing in AAA-rated developed markets such as Australia, Hong Kong and Singapore along with high-yielding New Zealand and rapidly growing emerging markets such as Thailand, Malaysia and Indonesia.
ALD is also attractive regarding sensitivity to interest rate increases with an effective duration of just 3.52 years. The ETF's average yield to maturity is 2.73 percent and the fund has a 30-day SEC yield of 2.25 percent.
For more on ETFs, click here .
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