Tag Archives: etfs

Miles Capital Launches Fund Of Alternative Funds

The recently launched Miles Capital Alternatives Advantage Fund has an interesting approach to multialternative investing: it gains its exposures by bundling other alternative mutual funds and ETFs. The fund, which launched on March 14, is available in N (MUTF: MILNX ) and I (MUTF: MILIX ) share classes, with respective net-expense ratios of 3.24% and 2.99% (this includes 1.24% of acquired fund fees from the underlying funds), and initial investment minimums of $2,500 and $50,000. Allocation Across Multiple Strategies The Miles Capital Alternative Advantage Fund’s investment objective is to provide long-term capital returns with less volatility than U.S. equity markets. It pursues this end by means of investing in mutual funds and ETFs employing the following strategies: Long/short equity Long/short credit Market neutral Arbitrage Global macro Moreover, the fund may invest in mutual funds and ETFs that bundle alternative assets, in addition to strategies. These assets may include commodities and commodity-linked instruments, currencies, real estate and other real assets, and illiquid private placements and distressed assets. For more information, read the fund’s prospectus . Fund of Funds Approach Although the “fund of funds” approach is common among hedge funds, “funds of alternative mutual funds and ETFs” are less so. Still, the Miles Capital Alternatives Advantage Fund isn’t the first. Three of the best performing funds from the group that came before it include: Of the three, CAALX is the largest in terms of assets under management (“AUM”), at $460 million. LPTAX was second, at $227 million AUM; while GASAX was the smallest, at $90 million AUM. How have these “funds of alternative funds” performed? In terms of their 3-year returns through February 29, CAALX was tops at +3.76%, which was good enough to rank in the top 7% of Morningstar’s Multialternative category. LPTAX’s 3-year returns stood at 2.73%, which put it in the top 15%. And GASAX returned 2.05% for the 3-year period ending Leap Day 2016, putting it in the top 23% of its peers. Past performance does not necessarily predict future results. Jason Seagraves contributed to this article.

Why Investors May Be Turning To Healthcare

By Jonathan Jones and Tom Lydon The Health Care Select Sector SPDR ETF (NYSEArca: XLV ) is up 2.3% over the past month and the largest healthcare exchange traded fund has shown some signs of awakening out of a long slumber, but some traders are not convinced, according to industry analyst ETF Trends . For XLV and rival healthcare ETFs, the good news is that the U.S. economy moving into the late-cycle phase, overall growth may slow and signs of an economic slowdown could pop up. Consequently, investors may also turn to defensive sectors that are less economically sensitive, such as health care. Looking ahead, in the years through 2024, spending growth is projected to average 5.8% and peak at 6.3% in 2020. Additionally, the actuaries calculated that around 8.4 million Americans became insured in 2014 and noted their increased use of medical services. The number of people on Medicaid is projected to increase to 78.1 million by 2024, outstripping Medicare, which is expected to have 70.3 million enrolled. Those anecdotes and data points apply to the long-term. In the near-term, some options traders are expressing doubt regarding XLV’s upside. “optionMONSTER’s tracking program detected the sale of 5,000 March 65 puts sold for $0.06 and the purchase of 5,000 April 65 puts for $0.69 today. Volume was below open interest in the near-term contracts, which expire at the end of this week, indicating that a bearish position was rolled forward by a month,” according to optionMONSTER . XLV is heavily allocated to blue-chip pharmaceuticals names, such as Dow components Johnson & Johnson (NYSE: JNJ ), Merck (NYSE: MRK ) and Pfizer (NYSE: PFE ), but the ETF also devotes more than 20% of its weight to biotechnology stocks. “Puts outnumbered calls by a bearish 4-to-1 ratio” in XLV on Wednesday, according to optionMONSTER. Health Care Select Sector SPDR Click to enlarge Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Dispelling Misconceptions On ETFs’ Place In The Market

By Max Chen and Tom Lydon As the exchange traded fund industry grows in size and accumulates over trillions of dollars in assets under management, some are concerned that the investment vehicle is beginning to sway markets or won’t hold up in times of severe stress, according to industry analyst ETF Trends . However, Joel Dickson, Head of Investment R&D at Vanguard Group, argued on the Financial Times that ETFs do not contribute to market volatility and will hold up in times of market stress, despite some concerns about the investment vehicle. First off, Dickson points out that the global ETF industry represents about $3 trillion in assets, compared to the $300 trillion in financial assets over all. Given the relatively small size compared to the rest of the financial market, Dickson argues that there would have to be something we aren’t seeing in ETFs for them to sway market volatility. ETFs, like stocks, trade on a stock exchange through a broker. This secondary market is responsible for most of the trading volume in ETFs. Dickson points out that in the U.S. daily data shows that the median ratio of ETF trading volume that took place on the secondary market was about 94% for equity and 83% for bonds. “The net result is that most ETF shares are traded between investors and do not result in any activity in the ETF portfolio,” Dickson said. “Based on this data it’s hard to argue that ETFs are a cause of market volatility. Niche products might have an impact in low-volume asset classes. But for the overall equity and bond markets, the answer has to be no.” Credit Suisses’s Victor Lin mirrored Dickson’s sentiments. In his research, Lin found that data shows ETF activity only drives a small percentage of volume for most stocks, reports Teresa Rivas for Barron’s . “Sampling data between January 2015 to January 2016, we found that increases in ETF flow driven trading (averaged over a month) for a stock did not consistently result in an increase in realized volatility for that stock (adjusted for market-wide changes in volatility) over a one-month timeframe,” Lin said in a note. With regard to ETFs struggling in times of market stress, which many pointed to during the events on August 24 last year, Dickson contended that the situation occurred due to structural problems of the exchanges rather than problems with the ETF wrapper. “Because ETFs are listed on an exchange, they are subject to the same demand/supply forces and circuit-breaker rules as ordinary equities,” Dickson said. “This is what happened on August 24: the spread between the bid and offer prices of listed stocks and ETFs widened and some were temporarily halted.” Since the structural problems were revealed in late August, many ETF providers have been in discussion with regulators and exchanges on ways to improve the market structure. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.