In more evidence of expansion in the Actively-Managed ETF space, on February 18, 2010, AdvisorShares announced a partnership with Peritus Asset Management LLC – a Santa Barbara based asset manager with approximately $492 million in assets under management that focuses on active fixed-income management. Peritus utilizes a value-based strategy that will be used to create a new Active ETF with AdvisorShares focusing on high-yield bonds. In what could be a sign of future possibilities with Peritus, both parties are in an exclusive agreement, where Peritus will develop all future ETFs with AdvisorShares.
New actively-managed ETFs in the fixed-income space have generated more buzz than those involved in the equity markets. AdvisorShares and Peritus, in focusing on high-yield bonds, have chosen a space that is still quite empty in the Active ETF arena. So far, most of the actively-managed fixed-income ETFs have either been money market instruments or funds investing in municipal bonds. Investors interested in the high-yield bond market have been largely restricted to mutual funds. In return for providing access to the high-yield bond market though, don’t be surprised to see a higher than normal expense ratio for this ETF once it’s launched.
Looking at AdvisorShares’ pipeline, the company has two more Active ETFs that they have filed for. The first is the “WCM/BNY Mellon Focused Growth ADR ETF” (NYSEARCA:AADR), which will looks to beat international indices such as the MSCI EAFE by investing in ADRs of foreign securities. The second in line is the “Mars Hills Global Relative Value ETF” (GRV) which will be a fund-of-funds, taking long/short positions in other ETFs. Look out for a much more in-depth analysis on these two planned offerings very soon.
Currently, AdvisorShares’ only product on the market is the Dent Tactical ETF (DENT: 19.44 +0.31%) which is the first to provide an “ETF of ETFs” structure. DENT invests across asset classes including equities, fixed income and commodities with the fund being managed by Harry S. Dent. The fund utilizes a forecasting approach that focuses on demographic trends and consumer spending patterns.
Disclosure: Author holds no positions in the above-mentioned names.