American Beacon Advisors has made its ETF debut with a fund that seeks to capitalize on price trends across multiple asset classes.
The ETF utilizes trend signals to go long or short across more than 20 liquid markets.
The American Beacon AHL Trend ETF (AHLT US) has been listed on NYSE Arca with an expense ratio of 0.95%.
The fund is sub-advised by London-based AHL Partners, a division of global active investment manager, Man Group.
In managing the ETF, Man AHL deploys a quantitative and systematic trading strategy that may enact long or short positions on more than 20 liquid markets across four major asset classes – stocks, bonds, commodities, and currencies.
The approach combines Man AHL’s “Managed Futures” and “TargetRisk” strategies, seeking to provide investors with a comprehensive and efficient alternatives solution.
The firm’s algorithm measures the degree of volatility in a particular market. If the market is turbulent, and returns are volatile, the algorithm will reduce exposure to that market. Conversely, it will increase exposure, subject to risk limits, if the market is calm and volatilities are decreasing. The ETF’s overall annualized volatility target is 15%.
To gain its exposure, the fund will invest primarily in derivatives, including futures contracts, foreign currency forward contracts, and swaps.
According to American Beacon Advisors, the strategy is expected to deliver portfolio benefits including diversification potential and drawdown protection.
Jeff Ringdahl, President and CEO of American Beacon Advisors, said: “We’re thrilled to officially enter the ETF market as our clients have expressed a strong desire for this alternative investment vehicle. Man AHL has solidified itself as a pioneer in systematic trading over the last three decades and, more importantly, has been a trusted partner of ours for nearly ten years. Launching this product is a natural step to build on our past achievements, and we look forward to offering our clients and investors a unique complement to traditional portfolios.”
Russell Korgaonkar, Chief Investment Officer of Man AHL, added: “As we approach a decade of partnership with American Beacon, we are thrilled to further build on that success by increasing access to liquid alternative strategies. We believe that a wide range of investors should have access to the diversification and crisis alpha embedded within trend-following and multi-alternative strategies. Demand to participate in more liquid vehicles is rapidly growing and ETFs are further complementing mutual funds as a critical component of the retail investor toolkit.”