Principal To Launch Global Opportunities Equity Hedged Fund
By DailyAlts Staff The Principal Financial Group is actively working to expand its presence in the liquid alternatives arena. On July 9, the firm launched its first ETF, the Principal EDGE Active Income ETF (NYSEARCA: YLD ), which uses a risk-managed approach to invest “opportunistically” across a wide range of income-generating asset classes. This alternative income ETF joined the firm’s alternative mutual fund, the Principal Global Multi-Strategy Fund (MUTF: PMSAX ). And now Principal is planning the launch of a new liquid alternative, the Global Opportunities Equity Hedged Fund, according to a recent SEC filing . Global Opportunities Equity Hedged The Global Opportunities Equity Hedged Fund will seek long-term capital appreciation with lower volatility than the global equity markets. It will pursue these ends by means of investing in U.S. and emerging-market equity securities paired with equity derivatives at the time of purchase. Under normal circumstances, the fund’s holdings will include securities from at least three foreign countries, and foreign securities will constitute at least 30% of its assets. Portfolio managers Christopher Ibach, Xiaoxi Li, and Principal CIO Mustafa Sagun select investments on the basis of value and/or growth potential, and they use a hedging strategy intended to reduce volatility by investing in equity derivatives. Currency forwards may also be used to hedge currency risk. According to the fund’s SEC filing, its net exposure will vary over time, but the fund will always maintain more long equity exposure than it has short exposure through derivatives. Shares of the Global Opportunities Equity Hedged Fund will be available in A-, P-, and institutional-class shares with an investment management fee of 1.10% and respective net-expense ratios of 1.55%, 1.30%, and 1.25%. The minimum initial investment for A-class shares will be $1,000. P- and institutional-class shares have no minimums for qualified investors. Principal’s Other Alternative Fund The Principal EDGE Active Income ETF only launched on July 9, and thus doesn’t have a performance record to speak of. The Principal Global Multi-Strategy Fund, however, debuted back in October 2011, and has earned a three-star rating from Morningstar. For the year ending June 30, 2015, the fund had returns of 2.41%, ranking in the top 29% of all funds in its Morningstar category. For more information, visit principalfunds.com .