Elkhorn loses last ETFs in acquisition no show

Apr 9th, 2018 | By | Category: ETF and Index News

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Illinois-based ETF provider Elkhorn Capital will lose its last four ETFs due to the falling through of an expected acquisition by Turner Investments. The acquisition was first announced in August 2017, at which time it was expected to reach fruition within weeks. Having been delayed on several occasions, both parties have announced the deal has officially been abandoned.

Elkhorn loses last ETFs in acquisition no show

The acquisition deal of Elkhorn Capital by Turner Investments has been abandoned.

When the acquisition was reported last year, analysts noted the potential synergies between the two firms; Turner could offer strong distribution channels, a robust operating platform, and rigorous investment processes, while Elkhorn could provide product capability, and a team with over 25 years of experience in the ETF industry.

Sadly, the synergies are not to be realised, as Turner turned away after negotiations had gone on for much longer than anticipated. Thus far, Turner has provided little comment on why it withdrew its offer.

Without an acquirer, Elkhorn’s investment advisory contracts have not been renewed by its board, leaving the ETF issuer unable to continue providing its four remaining ETFs to the market.

Two of Elkhorn’s ETFs will be taken over while the other two will be liquidated.

The Elkhorn Lunt Low Vol/High Beta Tactical ETF (LVHB US) and Elkhorn S&P High Quality Preferred ETF (EPRF US) will be managed by ETF provider Innovator Funds.

LVHB tracks the Lunt Capital US Large Cap Equity Rotation Index. The index uses a proprietary strategy which rotates between high beta and low beta companies of the S&P 500. The ETF currently has assets under management of just over $200 million with an expense ratio of 0.49%.

EPRF, with just under $20m in AUM, tracks the S&P High Quality Preferred Stock Index, which comprises preferred securities possessing quality characteristics. The ETF has an expense ratio of 0.47%.

Falling into the latter category are the Elkhorn Commodity Rotation Strategy ETF (DWAC US) and the Elkhorn Fundamental Commodity Strategy ETF (RCOM US) – the two commodities-based ETFs lack significant AUM to support their ongoing existence, with $2.5m and $12.7m respectively.

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