Notable ETF Filings and Launches Recap: August 2024

Recent ETF filings

Most of this month's notable ETF filings have come from Alpha Architects, known for their quantitative, research driven approach to fund design.

First up, there's the Alpha Architect US Anti-Dividend ETF (AAUS). This ETF aims for tax efficiency by leveraging proprietary research that suggests stocks scheduled to pay dividends should be avoided just prior to the dividend distribution and for at least 30 days afterwards.

The theory here is that demand for dividend-paying stocks drives prices away from fundamentals around dividend distributions—a phenomenon amplified by retail investors engaging in popular yet misinformed "dividend capture" strategies.

This ETF essentially mirrors a broad U.S. market cap-weighted index fund, minus any dividend-paying stocks during these critical periods. It's a novel approach that could complement tax-efficient portfolios, especially for those who prefer non-dividend-paying giants like Berkshire Hathaway and Amazon.

It's expected to have a higher turnover but sports a reasonable 0.15% expense ratio. There's also an international variant, the Alpha Architect International Anti-Dividend ETF (AAGL), which will follow a similar strategy with a slightly higher expense ratio of 0.25%.

Alpha Architects didn't stop there. They've also rolled out a suite of "BOX" ETFs, each following unique tax-efficient strategies pioneered by the Alpha Architect 1-3 Month Box ETF

. These include:

• Alpha Architect 1-3 Year Box ETF (BOXS)
• Alpha Architect Intermediate-Term Treasury Bond ETF (BOXI)
• Alpha Architect Long-Term Treasury Bond ETF (BOXL)
• Alpha Architect Aggregate Bond ETF (BOXA)
• Alpha Architect Inflation-Protected Securities ETF (BOXP)
• Alpha Architect Real Estate ETF (BOXR)

These ETFs are synthetic and utilize combinations of call and put options on ETFs or indexes, or FLEX Options, to achieve their exposure.

They aim to outperform their respective benchmarks using trend-following methods, like moving average rules, time-series momentum rules, and implied volatility levels, with excess cash in box spreads (or BOXX) to generate additional low-risk positive carry.

Recent ETF launches

The first launch that really caught my attention was the Defiance Daily Target 1.75X Long MSTR (MicroStrategy) ETF

.

This ETF extends the concept of leveraged single stock ETFs by applying a daily 175% (1.75x) leverage target to the returns of MicroStrategy, a company well-known for its significant cryptocurrency holdings and associated volatility.

Since its debut on August 14, MSTX has already amassed $52 million in assets under management. Typical of leveraged ETFs, it achieves exposure through swaps and carries a high expense ratio of 1.29%.

Another noteworthy debut is the Jensen Quality Growth ETF

, which launched on the NYSE. It's a high conviction portfolio holding 25-30 (currently 27) U.S. large-cap stocks chosen for their quality and growth characteristics, with an expense ratio of 0.57%.

This makes it a direct competitor to incumbent fundamental index-based strategies like the WisdomTree US Quality Growth Fund

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Lastly, Schwab is entering the ultra-short term bond ETF arena with the Schwab Ultra-Short Income ETF

, aiming to compete against products like the BlackRock Ultra Short-Term Bond ETF

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, Vanguard Ultra-Short Bond ETF

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, and Invesco Ultra Short Duration ETF

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This ETF provides a liquid alternative to money market funds—albeit without a fixed NAV per share. It's actively managed and invests in short maturity investment-grade debt, sporting an expense ratio of 0.14%. I anticipate it offering a competitive 30-day SEC yield of around 5%, similar to its competitors.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.