Riverfront launches asset allocation models based on active ETF suite

Jul 26th, 2016 | By | Category: Alternatives / Multi-Asset

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US-based asset manager RiverFront Investment Group has launched the RiverShares series of asset allocation model portfolios, consisting solely of actively managed exchange-traded funds sub-advised by RiverFront. The firm has partnered with First Trust Portfolios and ALPS to offer the ETFs, which can be purchased as individual products or used within a RiverShares model.

Riverfront launches asset allocation models based on suite of active ETFs

Michael Jones, RiverFront’s chairman and chief investment officer.

The RiverShares models will be managed using RiverFront’s proprietary ‘Price Matters’ approach, a dynamic investment process that attempts to select stocks priced below fair value according to long-term trend analysis, as well as RiverFront’s strategic allocation, tactical overlay and risk management processes.

Michael Jones, RiverFront’s chairman and chief investment officer, commented: “We are very excited to bring to the marketplace an innovative new set of asset allocation solutions. These portfolios are designed to meet the needs of investors seeking active management of their ETF portfolios, but in a platform that makes greater use of the inherent tax advantages of the ETF structure.

“Because we manage both the asset allocation portfolio and the underlying ETFs, a portion of our active management strategies can be implemented within the ETFs. This can potentially reduce turnover and tax consequences within the asset allocation portfolios without compromising the active nature of our investment approach.”

The RiverShares models are currently offered in four different global asset allocation strategies, which vary based on investment time horizons. They are comprised solely of a combination of the ETFs listed below:

Riverfront Dynamic Core Income ETF (NYSE Arca: RFCI)
Riverfront Dynamic Unconstrained Income ETF (NYSE Arca: RFUN)
Riverfront Dynamic US Dividend Advantage ETF (NYSE Arca: RFDA)
Riverfront Dynamic US Flex-Cap ETF (NYSE Arca: RFFC)
First Trust Riverfront Dynamic Developed International ETF (Nasdaq: RFDI)
First Trust Riverfront Dynamic Europe (Nasdaq: RFEU)
First Trust Riverfront Dynamic Asia Pacific ETF (Nasdaq: RFAP)
First Trust Riverfront Dynamic Emerging Markets ETF (Nasdaq: RFEM)

The ‘moderate growth & income’ strategy has a recommended time horizon of 5-7 years and uses a benchmark return of 50% of the S&P 500 return and 50% of the Barclays Aggregate return. The ‘dynamic equity income’ strategy has a recommended time horizon of 7-10 years and uses a benchmark return of 70% of the MSCI ACWI return and 30% of the Barclays Aggregate return. The ‘global allocation’ strategy has a recommended time horizon of 7-10 years and uses a benchmark return of 80% of the MSCI ACWI and 20% of the Barclays Aggregate return. The ‘global growth’ strategy has a recommended time horizon of 10+ years and uses the MSCI ACWI as its benchmark return.

The annual sub-advisory fee paid to Riverfront is 0.35%.

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