WBI launches multi-asset ‘Trend Switch’ ETF

May 31st, 2019 | By | Category: Alternatives / Multi-Asset

New Jersey-based investment manager WBI Investments has launched a new ETF in the US which uses quantitative investment models to allocate between equity and fixed income exposures.

WBI launches multi-asset ‘Trend Switch’ ETF

The fund uses various trend signals such as price momentum to determine whether the outlook for the US equity market is favourable.

The actively managed WBI BullBear Trend Switch US 3000 Total Return ETF (WBIT US) has listed on NYSE Arca and comes with an expense ratio of 0.68%.

According to the prospectus, the fund seeks current income with the potential for long-term capital appreciation while also protecting assets during market downturns.

The strategy first uses an equity model that evaluates macroeconomic (including commodity prices, credit spreads, and interest rates), fundamental (dividend yields and other valuation metrics), and technical (price momentum) factors to determine whether the outlook for the US stock market is favourable or not.

If the model indicates a low degree of risk, the fund will invest in US equity securities from across the market capitalization spectrum as well as ETFs and ETNs targeting this area.

If risk in the model surpasses a critical threshold, the fund will invest in various fixed income segments with allocations based on a separate bond model that incorporates credit and duration signals. Within the fixed income space, the fund may invest in US Treasuries, investment grade corporate bonds, high yield debt, and cash.

According to the fund’s prospectus, the strategy is likely to produce an annual turnover rate of more than 300%.

WBI’s ETF line-up currently consists of 13 funds with over $650m in AUM.

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