DoubleLine Replaces Wilshire As Sub-Advisor At Revamped AdvisorShares ETF

AdvisorShares did a wholesale makeover of one of its equity exchange-traded funds that included a new investment mandate and a new sub-advisor. In October, the Bethesda, Md.-based provider of actively managed ETFs changed the name of the AdvisorShares Wilshire Buyback ETF (TTFS) to the AdvisorShares DoubleLine Value Equity ETF (DBLV).

As part of the switch, DoubleLine Equity LP replaced Wilshire Associates as the fund’s sub-advisor. DoubleLine Equity is an affiliate of DoubleLine Capital LP, an investment management firm led by CEO Jeffrey Gundlach. While the firm is noted for its fixed-income expertise, it also oversees a sizable equity portfolio. The revamped AdvisorShares fund, which retained its net expense ratio of 0.90%, aims to hold a concentrated portfolio of 35 to 50 positions of both classic value and quality value stocks.

Redefining Value Investing

Distillate Capital’s name conjures images of petroleum distillates, but its first ETF takes a customized approach to value investing. The Distillate U.S. Fundamental Stability & Value ETF (DSTL) follows a rules-based index created by the Chicago-based asset manager that screens the 500 largest U.S. companies by market cap to eliminate those with less than five years of cash-flow-per-share data.

The remaining companies are evaluated on three proprietary fundamental measures: their financial indebtedness, their fundamental stability and their projected cash flows. Distillate believes its proprietary cash-based measure, called “distilled cash yield,” offers a consistent gauge of valuation by allowing a comparison of older, more physical-asset based companies with newer, more R&D-oriented ones. The fund, which holds roughly 100 companies, charges 0.39%.

Global X Launches Suite Of China ETFs

In the midst of trade war worries late last year, Global X debuted six China ETFs —five sector-focused products and the Global X MSCI China Large-Cap 50 ETF (CHIL)—that aim to provide investors with more flexibility in investing in the world’s second-largest economy.

Despite the headline worries, Global X believes it’s a good time to launch China-focused ETFs because all of the talk about slowing global growth, increasing political tension and trade wars drives a wedge between the returns of different sectors in China. “The whole thesis behind sector investing is that these stocks don’t trade as one,” said Jay Jacobs, head of research and strategy at Global X Funds.

The five new sector ETFs comprise the following:

· Global X MSCI China Consumer Staples ETF (CHIS)

· Global X MSCI China Health Care ETF (CHIH)

· Global X MSCI China Information Technology ETF (CHIK)

· Global X MSCI China Real Estate ETF (CHIR)

· Global X MSCI China Utilities ETF (CHIU)

An ETF For Black Swan Events

Last quarter’s stock market volatility rattled investors and likely prompted lots of serious thought about downside protection. In what perhaps is a case of fortuitous timing, Amplify ETFs in November introduced the Amplify BlackSwan Growth & Treasury Core ETF (SWAN), which tracks an index designed to provide upside exposure to the S&P 500 while offering a bond-heavy portfolio to protect investors against sharp equity downturns.

Roughly 90% of the fund will allocate to U.S. Treasurys ranging from two- to 30-year durations, which cumulatively provide a portfolio duration akin to 10-year Treasury notes. Duration measures a bond’s sensitivity to changes in interest rates, and the 10-year note was chosen on the premise that returns on intermediate-term U.S. Treasury securities tend to have low correlations with U.S. equities.

The remaining 10% or so of the underlying S-Network BlackSwan Core Total Return Index will comprise LEAP options on the SPDR S&P 500 ETF (SPY) in the form of in-the-money calls, which are options contracts with a strike price below the current price of the targeted asset. The options provide leveraged exposure to equities, and will generally have a delta of 70 at the time of purchase, meaning that each LEAP option will have a corresponding movement of 70 cents for every $1.00 of movement in the share price of SPY. In other words, the fund strives to capture 70% of the upside experienced by the SPY fund over a full market cycle.

The index reconstitutes and rebalances every June and December, and its expense ratio is 0.49%.