There is now an index that divides the whole of American digital commerce into six fixed slices, and gives the largest one, jointly, to the software on the device in your pocket. It is weighted by operating system market share, which is a polite way of saying that the weighting committee did not need to meet for long.
The fund tracks the Pence Ubiquitous Index, which sets out to capture companies that “materially participate in the digital commerce value chain”. Every eligible company is placed in one of six segments, and each segment gets a fixed target weight: Devices 24%, Platforms 24%, Digital Advertising 18%, Connectivity 14%, Payment 12% and Delivery 8%.
Inside each segment, the weighting rule is whatever measures dominance best. Devices are weighted by US desktop, mobile and tablet operating system market share. Payment is weighted by card network spending volume. Delivery is weighted by package volume. Connectivity is split further into telecoms at 6%, cable and satellite at 4% and tower REITs at 4%, which means somebody has formally decided that the steel mast on the hill is a 4% stakeholder in your online shopping.
The list of eligible sub-industries includes restaurants, passenger ground transportation and telecom tower REITs. It is a broad church, and yet the prospectus counts only 23 congregants, ranging from roughly $25 billion to $4.7 trillion in market value. “Ubiquitous” turns out to describe the companies rather than the portfolio.
None of this is new to AAM. The firm has sold Ubiquitous Strategy portfolios as unit investment trusts for years, in numbered series that mature and get replaced. The ETF is the version that does not expire, at 0.49%.
A global macro fund is defined less by what it holds than by what it refuses to promise. This one has “no set asset allocation or foreign issuer targets or ranges”, may go long or short across equities, debt, currencies and commodities, and invests “without restriction as to issuer capitalization, credit rating, country, currency, or debt maturity”.
The constraints that do exist are worth admiring for their modesty. “Global” in the name means the fund will have exposure to issuers in at least three countries. The sub-adviser will pick among “10-20 allocations”, which it may express through hedge fund replication, managed futures, risk parity or a fund-of-funds structure. In other words, it is a macro fund that can also be a fund of other macro funds, at a 0.50% unitary fee.
The prospectus lists the macro forces the manager watches as “(i) economic growth rates, (i) inflation, (iii) interest rates”. There is no (ii). For a strategy built on spotting what the market has missed, it is a fitting place to start.
Fidelity's new pair combines actively managed equity portfolios with a systematic overlay that sells index call options for extra income. The pitch is candid about the trade. In the issuer's own words, the option premiums also help “to cushion some of the impact of market declines”, which is the standard covered-call bargain: a little income now in exchange for some of the upside later.
DWS is bringing four of its most ordinary Irish-domiciled ETFs to Singapore, trading in Singapore dollars and eligible for the country's Supplementary Retirement Scheme. Being Irish-domiciled, they benefit from the 15% treaty rate on US dividend withholding rather than the 30% a Singapore-domiciled fund would pay, and all four accumulate, so the dividends never leave the building.