The most famous group of stocks in the world has seven members. Global X has built a fund on six of them, and its summary prospectus manages not to say the missing name even once.
The six are Alphabet, Amazon, Apple, Meta Platforms, Microsoft and NVIDIA. Anyone who has read a market headline in the last few years can work out who was left at the door. Tesla does not appear anywhere in the document, which is the investment equivalent of a wedding photo where one of the brothers has been very carefully cropped.
The reference is the Akros Magnificent Six Index, owned by Akros Technologies, which is not affiliated with the fund. But the fund is actively managed and the adviser “is not required to replicate” that index. So this is an active strategy with a universe of six stocks, a published list of those six stocks, and the discretion to deviate from them.
Weighting is by free-float market capitalisation, with a 25% cap per company and the excess redistributed to the rest.
Exposure comes from holding the shares “and/or through swaps and other derivatives”, and the prospectus warns of “sole or substantial exposure to one counterparty”. I recently wrote about a zero-fee ETF whose swap bank pays the fund. This one has a plainer arrangement: 0.20% a year, $20 on $10,000, for six stocks that most investors already own several times over through every index fund they have.
These two funds hold one portfolio and insure another. The equity side tracks the Beta Advantage Research Enhanced U.S. Equity Index, Columbia’s own index of roughly 325 to 400 companies and the engine behind its existing RECS fund. The protection is bought on the S&P 500. The prospectus puts the overlap in holdings between the two at 41.5%, and states plainly that the fund “does not directly hedge the Equity Portfolio itself.”
The buffers then divide the losses between them with some precision. The Deep Buffer fund buys one-year puts struck at about 85% of the index, so it protects against losses beyond 15%. The Moderate Buffer fund leaves investors “exposed to the first 2% decline”, buys puts at about 98% and sells puts at about 85%, so its protection runs from 2% to 15% and then stops. The moderate buffer ends exactly where the deep buffer begins.
Both ladder their puts so that about a quarter expire each quarter, and both charge 0.69%. The Deep Buffer fund pays for part of its protection by selling short-dated calls, and “generally foregoes upside returns beyond the strike price”. It also says, with admirable candour, that it “does not pursue a defined outcome strategy, and investors are not assured a specific buffer.” A buffer fund that does not promise a buffer is at least being honest about the one thing everyone was going to ask.
Purpose already runs a tidy ladder of single-ticket portfolios: Active Conservative, Active Balanced and Active Growth, managed by Craig Basinger to target allocations using a mix of third-party and in-house ETFs. The Balanced fund’s holdings read like an industry directory, with BMO, iShares, Vanguard, Invesco, Avantis and SPDR all present and Purpose’s own products limited to 40%.
The new arrival is the logical top rung, an Active Equity Fund. What it holds, what it charges and how it is rated, Purpose has yet to say anywhere I could find.
Eight BNP Paribas funds have gained Swiss franc trading lines, and at least one of them has an interesting past. BNP Paribas Easy II NASDAQ 100 UCITS ETF was launched by AXA Investment Managers, and it was the fund that brought AXA IM to SIX as a new ETF issuer. When BNP Paribas bought AXA IM, the fund was renamed into the Easy family.
That is the second time AXA’s ETFs have ended up at BNP Paribas. The Easy ETF brand began as a joint venture between the two firms, and AXA IM sold its share to BNP Paribas, left the ETF market, came back and has now been bought again. The fund it launched on its return now carries the name it helped invent first time round.
The rest of the batch is reassuringly stable. BNP Paribas Easy Dividend Europe tracks a high-dividend index through a swap and accumulates, so the dividend fund pays no dividends and reinvests them instead. The emerging markets ex China fund charges 0.09%, MSCI EMU charges 0.06%, and BNP Paribas Easy MSCI USA charges 0.04% with full physical replication.