From the man who last year said exchange-traded fund investors will get crushed by the worst bear market in a lifetime comes a new ETF that launched Thursday on the NYSE Arca exchange.
The Rogers AI Global Macro ETF (BIKR) comes with the imprimatur of veteran commodities and equities investor Jim Rogers, who is currently bearish on the U.S. while favoring certain overseas markets.
In that vein, BIKR (which would’ve been a great ticker symbol for a motorcycle-themed ETF) aims to provide an “optimally weighted” global portfolio consisting mainly of single-country ETFs.
The fund is based on the Rogers AI Global Macro Index, which was created by Ocean Capital Advisors LLC, a Washington, D.C.-based investment management firm where Rogers serves as chairman.
The index is weighted based on a proprietary artificial intelligence-driven algorithm that analyzes macroeconomic data—such as volatility, interest rates, productivity and gross national product—on a monthly basis to identify changing market conditions in individual countries and across the global economy. The model seeks to calculate and incorporate longer-term trends (up to 18 months) and short-term cycles to make investment allocations in mainly single-country ETFs.
When the model says it’s time to ease up on equities, the fund will allocate to an ETF that tracks one- to three-year U.S. Treasuries. Based on BIKR’s initial allocation as a publicly traded security, the global investment scene evidently is sending bearish signals because the iShares 1-3 Year Treasury Bond ETF (SHY) is by far the fund’s largest holding at nearly 25 percent of the portfolio.
The next largest holding is the iShares MSCI Brazil ETF (EWZ), at 6.4 percent. The rest of the top 10 holdings consist of iShares single-country funds focused on South Korea, Hong Kong (which isn't a country, per se), Mexico, Malaysia, Thailand, Singapore, Belgium and Taiwan.
The overwhelming majority of the fund’s 40 holdings are single-country iShares ETFs, save for three single-country Global X funds investing in Argentina, Colombia and Norway, respectively. BIKR’s underlying index is rebalanced on the first business day of each month, with the weight of each individual country (but obviously, not 1-3 year Treasuries) capped at 10 percent.
BIKR’s management fee is 0.75 percent, and the current average weighted cost of owning the ETFs in the portfolio is 43 basis points. Together, these fees comprise the fund's total operating expense of 1.18 percent. "That can change depending on the weighting of the ETFs and the ETFs that are purchased," says Sam Masucci, CEO of ETF Managers Group, a firm that provides a full-service platform to bring ETFs to market and which partnered with Ocean Capital on the launch of BIKR.
Rogers made waves last year when he warned that a “horrendous” bear market is coming due to excessive debt levels across the global economy. As a result, he said, retail investors holding index-based ETFs will get crushed when mass selling ensues.