Another month is in the books, bringing more than a hundred new ETFs to market. From global equity funds to dividend strategies, the new strategies offer investors plenty of tools to customize portfolios. Per Factset data, 128 new ETFs arrived in December, adding to an ever-growing pool of ETF offerings. Three ETFs from within that crop may invite further attention from investors with some particularly intriguing approaches.
Finding Value Opportunities in an AI ETF Wrapper
Harbor Distributors, together with Earnest Partners, launched the Harbor AI Inflection Strategy ETF (EPAI) in December. The strategy charges an 88 basis point (bps) fee for its approach to AI equities. The AI ETF takes an active approach to those stocks, with the subadvisor, Earnest Partners, leading the way in investment decisions.
Earnest focuses on AI companies in some key areas. That includes companies focused on enabling AI infrastructure like data centers and power generation. Other areas include companies adopting AI to reduce costs or create new revenue streams and certain second-order beneficiaries indirectly benefitting from the AI revolution like energy and utility companies.
The shop leans on an approach that emphasizes strong business fundamentals, revenue growth, healthy profits and cash flows. It applies a bottom-up investment process that looks to those metrics while also measuring value, volatility, and sector weightings. With that value view, the fund could offer a different route into the important, but top-heavy, AI category.
Active Quant ETF Adds Intriguing Futures Use
Man Group Plc.’s Man funds offers a variety of strategies for investor consideration. The latest addition, the Man Active Trend Enhanced ETF (MATE) arrived in December. The strategy charges a 97 bps fee for its approach.
The fund combines U.S. equity exposure with a global futures overlay. That overlay relies on a systematic, trend-following approach. By using leverage, the strategy aims to create a 100% exposure for each of those two substrategies. It uses a quantitative model to allocate between those strategies. The futures overlay dips into equities, currencies, fixed income and more, while the U.S. equity side focuses on that segment specifically.
Foundational Software Equities ETF AOTS Joins the Fray
AOT Invest LLC launched a new ETF in December as well, the AOT Software Platform ETF (AOTS). AOTS tracks an index of software-driven firms focused on software platforms. Charging 49 bps, the strategy emphasizes enterprise software and cloud infrastructure as two of several different target segments. Firms must display a positive price-to-earnings ratio to be included in the index. The index also includes a factor score for individual securities comprising cost of goods sold relative to revenue as well as return on invested capital. It weights companies with more than 50% software revenue higher in the index than other firms.
Each of the three strategies could play an appealing role for investors in the next year. Two of the three, AOTS and EPAI, provide different ways to get tech exposure into a portfolio. With concentration risk looming over investors, given how large a role the megacap tech and AI hyperscaler firms play, getting different views into tech can help. MATE also offers a different view on equities by combining its futures overlay and a domestic U.S. equities focus. Together, those new ETFs and others launched in December add to the ever-expanding ETF universe of choice.
vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for AOTS, for which it receives an index licensing fee. However, AOTS is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of AOTS.
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