Active income ETF from Tuttle
Belponte Asset Management, a Greenwich-based asset manager, is listing a new actively managed trend-following income ETF with help of quant firm Tuttle Tactical Management.
The Tactical Income ETF (TBND) TTBD will take a multi asset and, where necessary, fund of funds approach in search of income. The fund invests in four major asset classes: REITs, MLPs, fixed income and dividend stocks. Asset allocation is decided by an in-house trend-following model from Tuttle, which tells the fund when and what to buy, based on what it judges produces the best income.
The fund has a total expense ratio of 1.71%, after Belponte and Tuttle both take their layer of cream. (Only 0.30% of that TER is acquired fund fees).
Analysis – not today
I have a lot of admiration for ETF entrepreneurs. Entering the market at this stage is tough and involves going up against the Vanguard’s of the world, who outgun you for resources in every way. It takes a lot of courage and a ruthless work ethic.
From a content perspective, the smaller ETF providers are always a lot more interesting to write about. They’re typically taking more product risk and they’re typically the ones rolling the dice on something innovative.
While I admire their tenacity in listing it, TBND is a risk for me. It contains a bunch of things that are unideal rolled into one:
- Market timing;
- Deep chartism (“trend following”, “technical analysis”, if you prefer)
- Massive fees
- Opaque asset allocation strategy
I guess there might be a place for this type of product somewhere. Someone willing to pay high fees for a more obscure income product. But I’ll leave it to others.