RIAs who think they have a whiz bang investment strategy that might translate into a successful exchange-traded fund now have another avenue to make it happen.
Gemini Fund Services LLC and Arrow Investment Advisors LLC have joined forces to create the Northern Lights ETF Trust (NLET), a shared fund trust designed to bring new ETF ideas to market.
“We want to lower the barriers of entry to create ETFs,” says Andrew Rogers, president of Hauppauge, N.Y.-based Gemini, a turnkey company that helps advisors and others create mutual funds, variable annuity funds and hedge funds.
To date, Gemini has launched three shared mutual fund trusts under its Northern Lights Fund Trust umbrella. These pooled trusts are comprised of independent funds that are managed by separate investment advisors, and are designed to create operational efficiencies and streamlined regulatory compliance to make it more cost-effective to create and maintain funds than on a standalone basis. The funds in the trust are sold mainly through third-party intermediaries such a broker-dealers, wirehouses, and custodial platforms.
Gemini also has its Northern Lights Variable Trust to service variable insurance trust funds that are offered through insurance company platforms, as well as services to help investment advisors launch hedge funds and other alternative investments such as collective investment trusts.
NLET is designed to be stocked with independent ETFs managed by separate investment advisors. Like with the mutual fund trusts, it will be sold mainly on third-party platforms.
To date, the first and only fund in the trust is the Arrow Dow Jones Global Yield ETF (GYLD), which is a multi-asset income ETF tracking the Dow Jones Global Composite Yield Index that’s comprised of five equal-weighted yield categories––alternatives, corporate debt, equity, real estate and sovereign debt––for a total of 150 high-yielding securities.
GYLD’s launch last May was the formal beginning of NLET, but Rogers says he held off marketing the ETF trust until GYLD had a chance to prove itself in the market. “We first wanted to make sure it was going to be successful,” he says. “Now we’re comfortable it’ll be a success.”
As of Friday, GYLD has gained nearly 12% since inception and sports a market cap of $32 million with an expense ratio of 75 basis points. Gemini started marketing NLET late last year.
Gemini has a longstanding relationship with Arrow Investment Advisors, an Olney, Md.-based asset management firm that specializes in tactical and alternative investments and is the advisor to Arrow Funds (mutual funds) and ArrowShares (ETFs). Arrow was one of the first clients in the Northern Lights Fund Trust and was instrumental in the success of the trust, Rogers says. The Arrow Funds eventually left the trust, but still utilizes Gemini for administration, transfer agency and accounting services. Arrow and Gemini teamed up again to launch the first ETF in the NLET, and Arrow will play an active role in bringing additional ETFs to the fold.