Sub Prime ETFs

USA

New US issuer Spinnaker ETF Trust is set to launch its three inaugural products in New York. Little information is publicly available about the issuer. It is advised by OBP Capital, a North Carolina-based group about which there is also little public information.

The three debut ETFs are:
• Fieldstone UVA Unconstrained Medium-Term Fixed Income ETF (FFIU)
• Fieldstone Merlin Dynamic Large Cap Growth ETF (FMDG)
• Fieldstone UVA Dividend Growth ETF (FFDV)

FFIU invests in debts with 5 – 7 year maturities. As the name suggests, it is unconstrained in what it can invest in. This includes junk bonds and sub-prime mortgages. The prospectus states: “The Sub-Adviser considers all mortgage-backed securities to be eligible for purchase regardless of their credit rating or lack thereof.” Investors who remember 2008 might be wary. Total fees will be 1.23%.

FMDG will invest in 25 large cap companies that Merlin Asset Management, a Boston-based consultancy, believes will sustain large profit margins. Total fees will sit at 1.43%.

FFDV will invest in both American and foreign companies of any size that the fund’s advisers, Fieldstone Financial and Universal Value Advisers, believe to have high dividend hopes. It will mostly invest in stocks but also in derivatives and cash. Total fees will be 1.63%.