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Aberdeen Reorganizes And Liquidates Arden Funds

Aberdeen, the new owner of institutional fund-of-hedge-funds firm Arden Asset Management, is shutting down and liquidating the Arden Alternative Strategies Fund (MUTF: ARDNX ) that Arden launched nearly three-and-a-half years ago. In addition, Aberdeen has reorganized a sister fund, the Arden Alternative Strategies Fund II, into the Aberdeen Multi-Manager Alternative Strategies Fund II (MUTF: ARDWX ). These moves come as the consequence of Aberdeen Asset Management’s acquisition of Arden, which was announced in August 2015 and completed on the last day of 2015. Early Success When the Arden Alternative Strategies Fund originally launched in November 2012, Fidelity Investments was the fund’s sole client. This proved to be a fruitful relationship as the fund grew to a peak of nearly $1.2 billion in assets in November 2014. With a strategic relationship in hand and outperformance in 2013 – beating the category by 416 basis points, with a return of +6.58% for the year – Arden launched a second fund in early 2014, the Arden Alternative Strategies Fund II, which was open to all investors. The original fund posted returns of -0.49% in 2014 and -3.44% in 2015, while the new fund returned +1.20% from its February 3, 2014 launch through the end of that year, followed by gains of 0.07% in 2015. Through February 29, 2016, the funds had respective returns of -2.27% and -1.14%. The Winding Down The underperformance of the original fund, along with likely re-allocations by Fidelity, caused its assets under management to fall from its peak of nearly $1.2 billion to $852 million as of the end of February 2016. While many firms would be delighted with assets at this level, Aberdeen decided to liquidate the fund. According to a February 24 filing with the Securities and Exchange Commission (“SEC”), the Arden Alternative Strategies Fund ceased taking money from new investors on February 29 and is expected to be fully liquidated by the end of March 2016. The fund’s Board of Trustees’ stated reasons for liquidating the fund were concerns over its “long-term sustainability.” As witnessed with other funds, single client risk, or client concentration, often looms large, and can result the liquidation of a fund on fairly short notice. Past performance does not necessarily predict future results. Jason Seagraves contributed to this article.

NOBL: An ETF For Dividend Growth And The Quest For Yield

By Max Chen and Tom Lydon Investors seeking a steady yield-generating exchange traded fund to help diversify their portfolios in a volatile year can look to the ProShares S&P 500 Aristocrats ETF ( NOBL ) for quality stock market exposure and sustainable dividends. “By investing in dividend growth strategies, you not only get high-quality companies that have delivered strong total returns, you also get the potential for attractive yield,” according to ProShares . “If you look at effective yield, you’ll see dividend growth strategies have significantly outperformed the broader market.” NOBL, which has accumulated $1.39 billion in assets under management, shows a 2.03% 12-month yield and a 0.35% expense ratio. The dividend ETF has been outperforming the broader equities market. Year-to-date, NOBL rose 5.5% while the S&P 500 index was only 0.9% higher. Over the past year, NOBL increased 4.3% as the S&P 500 dipped 0.6%. NOBL’s 17.2% tilt toward industrials and 10.4% position in materials helped the ETF capitalize on the recent rally in more undervalued sectors of the market. Additionally, the fund holds large positions in more conservative or defensive sectors, including 12.9% in health care and 25.5% in consumer staples. The recent selling pressure in the equities market has also made dividend stock plays more attractive , especially as the Federal Reserve projects only two interest rate hikes this year, compared to previous expectations for four rate hikes. As the S&P 500 index experiences its worst start to a new year since 2009, yield spread between the benchmark and 10-year Treasuries widened to their largest spread in a year. The difference between U.S. equity dividend yields and government bonds can be used as a proxy for valuation comparison between the two assets. On average over the past year, the yield on 10-year Treasuries exceeded that of the S&P 500 dividends by 7.7 basis points. However, the recent volatility helped push yields on 10-year Treasury notes below 2%. NOBL, which tracks the S&P 500 Dividend Aristocrats Index, targets the cream of the crop, only selecting components that have increased their dividends for at least 25 consecutive years. Consequently, investors are left with a portfolio of high-quality, sustainable dividend payers as opposed to more high-yield focused funds that may contain companies on more precarious financial positions. High-yield equity funds can be enticing to income-seeking investors, but the higher yields come with higher the risks and are often unstable, writes Kevin McDevitt, a senior analyst for Morningstar . Alternatively, McDevitt argues that dividend growth is a more important factor for long-term dividend investors. “Dividend growth plays a big role in determining total income over the life of an investment,” McDevitt said. “As a general guideline, the higher a company’s, and by extension a fund’s, yield, the less quickly it will grow over time. Over the short run, this initial yield matters more than dividend growth. But as the time horizon grows, dividend growth has a greater impact on the overall payout.” ProShares S&P 500 Aristocrats ETF 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.

Chart Of The Week – 2008 Or 2011?

By Joseph Y. Calhoun Credit spreads are a big input to our investment process. It was the widening of spreads that convinced us to reduce our equity allocation before the volatility of last year. But active asset allocation requires that you get two consecutive decisions correct and that isn’t an easy task. Right now, for instance, we are watching spreads intently trying to figure out whether the all clear has been sounded. Spreads have narrowed considerably over the last five weeks, and if they continue to do so, we will, in keeping with our process, be forced to raise our risk budget. When we did our monthly Global Asset Allocation review 11 days ago, the trend was still toward widening and the decision was obvious but spreads have continued to narrow. So, the big question facing us and all the other tactical allocators is this: Is it 2008 or 2011? If it’s the former, we have just been given a wonderful opportunity to get more defensive. If it is the latter, we need to figure out how to raise our risk allocation. Click to enlarge So which is it?