Products February 7, 2011

Investment Manager Releases Long/Short Fund

February 7, 2011 (PLANSPONSOR.com) – 361° Capital, an investment management firm focused historically on managing alternative investments for institutions, has launched its first mutual fund, the 361° Absolute Alpha Fund.
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The 361⁰ Absolute Alpha Fund is a multi-manager Long/Short equity fund that is designed with the intent to provide capital appreciation with low volatility and low correlation relative to the broad domestic and foreign equity markets, according to the announcement. The 361⁰ Capital Absolute Alpha Fund offers investors access to both high alpha producing external managers and an overlay of historically successful risk management techniques which seek to hedge against downturns in the equity markets.

According to the company, the fund’s selected managers include hedge fund managers and other investment firms that 361°Capital has invested with for many years through its institutional hedge fund of funds portfolios.

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The fund will be available to investment advisers and institutions. The fund is available in A shares (symbol AAFAX) with a 5.75% front end load that can also be used in load waived, fee-based accounts. The fund also issues institutional I shares (symbol AAFIX) that require a $1 million minimum purchase.

More information is at www.361funds.com. 

Products February 7, 2011

Morningstar Announces New Measures for ETFs

February 7, 2011 (PLANSPONSOR.com) - Morningstar, Inc. has introduced four new data points for exchange-traded funds (ETFs) that it says will provide investors with more robust measures of the total costs and risks associated with investing in individual ETFs.
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Three of the new data points help to quantify the total cost of an ETF by measuring the contributions of an ETF’s portfolio manager to performance and liquidity in the secondary market. The fourth new data point measures portfolio concentration in individual sectors or individual securities.  

According to a press release, the new data points are: 

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  • Tracking Error: a measure of how closely an ETF follows its benchmark index on a day-to-day basis. Typically caused by sampling error or incomplete replication of the benchmark portfolio, tracking error can cause an ETF’s performance to deviate dramatically from its index over time.  
  • Estimated Holding Cost: a measure of cost that takes into account both explicit and indirect expenses and payments, like income to the ETF from lending shares to options traders. This measures long-term deviations from the index excluding intraday volatility.  
  • Market Impact Cost: a measure of an ETF’s liquidity, by calculating the basis point change in an ETF’s price caused by a $100,000 trade. ETFs with lower liquidity can cost more to buy as large purchases drive up their price.  
  • Portfolio Concentration: a measure of portfolio concentration in a single or small number of sectors, countries, securities, or credit grades or durations, which can affect investment risk.  

 

Morningstar covers about 98% of the ETF universe, with analyst research reports on more than 400 ETFs and data on approximately 4,500 ETFs. The firm has more than 15 ETF analysts globally.  

The new data points are currently available in Morningstar Direct, the company’s Web-based global research platform for institutional investors and through licensed data feeds.   

To view the methodology for the new ETF data points, visit http://global.morningstar.com/ETFdatapoints.

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