Don’t Tread On Me


Newcomer lists ETF of ETFs

Gadsden ETF Trust – an industry newcomer about which we could find little information – is teaming up with white labeller ETF Series Solutions to list two new actively managed ETFs.

  • Gadsden Dynamic Multi-Asset ETF (GDMA)
  • Gadsden Dynamic Growth ETF (GDG)

GMDA will build a portfolio made of two sleeves, one “strategic” the other “tactical”. The strategic component will make up 80% of the portfolio and will maintain a balance between high and low risk investments. It can invest in more or less anything, from ETFs and real estate, to commodities to leveraged funds to cryptocurrencies. The strategy will be set by the funds’ managers, with help from a proprietary macro-economic model, the prospectus indicates. But beyond saying the strategy will diversify with an eye to the economy, it doesn’t give away too much. The tactical sleeve will make up 20% and will be more actively managed. The tactical sleeve will make allocations will be based on the projected near-term performance of different asset classes, the prospectus indicates.

GDG will reiterate the strategic and tactical sleeve approach but for growth assets. The prospectus contains almost zero gleanings on how growth opportunities are identified. It suggests that it may include a factor-based approach but beyond that not much.

Columbia Threadneedle lists municipal ETF

Columbia Threadneedle is listing a new diversified municipal bond ETF, that tracks and index it worked with Bloomberg to put together. The Columbia Multi-Sector Municipal Income ETF (MUST) will divide the US municipal bond market into several sectors, represented by subindexes with different weightings. They are:

  • Municipal Core Revenue Sector (45%);
  • Municipal Health Care Sector (20%), for healthcare related debt;
  • Municipal High Quality Revenue Sector (15%), for high quality bonds;
  • Municipal Core GO Sector (10%);
  • Municipal High Yield Sector (10%).

Each of the subindexes is derived from a sub-set index or indices of the Bloomberg Barclays Municipal Bond Index, which serves as each sector’s initial universe of securities eligible for inclusion in the Index.

The index is a broad-based market value-weighted and designed to achieve higher yields and stronger risk-adjusted returns relative to the parent index.

We presume that the higher returns will be achieved by taking on more risk and making a larger allocation to less liquid higher yielding bonds.