Ritholtz Wealth Management Files to Launch First ETF
Ritholtz Wealth Management, an RIA with $7.6 billion in client assets, has filed with the SEC to launch its first ETF, an active fund called Goaltender ETF (GTND).
According to the prospectus, the fund “principally invests based on signals from a trend-following strategy developed by the fund’s sub-adviser, Ritholtz Wealth Management LLC (the “Sub-Adviser”), which seeks to adjust exposure to U.S. equity markets based on price trends over various periods typically ranging from six to ten months.”
The ETF is designed to “maintain equity exposure during sustained market uptrends and to become more defensive during market downtrends. The signals from the strategy are generated monthly as of the last trading day of each month, and updated allocations apply for the following month.”
The ETF will feature four sleeves, “each tied to a particular U.S. equity market price index based on the price of the index relative to its simple moving average for a certain period of time.” It will be based off the Solactive GBS United States 500 Index and the Solactive United States Technology Index. At the end of each month, allocations will be adjusted to risk-on or risk-off approaches based on whether the indexes close above or below their simple moving averages over select time periods.Ritholtz declined to comment on the filing, citing the standard quiet period when funds are being reviewed by the SEC. If the ETF is approved on a typical timeline, it will likely go into effect in the second quarter of this year.
However, the firm has previously outlined the goaltender approach on its blog and used the same methodology on a tactical asset allocation portfolio with the same name. It’s meant to manage against emotional errors. Barry Ritholtz also recently discussed how to build an ETF on a recent podcast episode.
In a blog entry in 2019, Ritholtz CEO Josh Brown wrote, “Goaltender is the only tactical strategy I’m aware of that was built internally at a wealth management firm with the express purpose of managing investor behavior rather than trying to outsmart the markets, generate alpha or call tops and bottoms. Almost every tactical strategy we’ve seen in the wild is oriented toward impressing people, beating markets, making rapid moves and incorporating economic data, sentiment surveys, fundamentals and other bulls*** that doesn’t actually work.”
If the fund is approved, Ritholtz will be the latest RIA to launch its own ETF, a tactic some advisors have adopted in recent years.
For example, last June, RFG Advisory, a Birmingham, Ala.-based hybrid RIA with $6.5 billion in AUM, introduced nine ETFs, including five core equity funds and four fixed-income ones. Other RIAs that have launched ETFs include Nicholas Wealth, which launched Nicholas Crypto Income ETF (BLOX), which combines direct exposure to Bitcoin and Ethereum through ETFs with investment in publicly-traded companies. And Cambria Investment Management, an RIA based in Manhattan Beach, Calif., that manages $2.6 billion in AUM launched Cambria Global Weight ETF (GEW).
Other RIAs have used a Section 351 exchange to convert existing SMAs into ETFs.