ETF-only Portfolios to Utilize Mutual Fund Structure While Retaining Transparency, Tax Efficiency and Low Expense Ratios
NEW YORK -- XTF, an asset manager specializing in strategic and tactical asset allocation portfolios composed of exchange traded funds (ETFs), announced today that it is entering the 401(k) market by introducing nine new low-cost, ETF-based mutual fund portfolios. The offering includes three tactical asset allocation portfolios - conservative, moderate and aggressive; four target date portfolios spanning dates from 2010 - 2040+; and a Country Rotation Portfolio and Sector Rotation Portfolio.
The mutual fund portfolios will target two distribution channels - the 401(k) market and retail advisors. XTF will provide the portfolios to investors both through advisors, and via companies that specialize in qualified retirement plans and offer the funds on their platforms.
"The retirement market is something that can benefit greatly from the low fees, transparency and stability that ETFs offer, and providing our portfolios to plan managers is the next step in our evolution and that of the ETF industry," said Michael Woods, chief executive officer of XTF. "The mutual fund structure - in addition to our established SMA offerings - is something that we've been considering for a long time, and demand in the 401(k) market is such that now is the right time to launch these portfolios. The fact that we have immediately signed up multiple platforms to distribute the funds demonstrates that investors are eagerly anticipating our ETF packaged solutions."
XTF believes that investors will benefit from changes to the defined contribution market detailed in the Pension Protection Act of 2006. For one, the Act expands the default investment options in 401(k) plans to include target date funds. In addition, XTF's diversified portfolios will provide these plans with a more consistent, less expensive option than previous 401(k) investments that were typically based on actively managed mutual funds and bonds.
An additional advantage provided by XTF's portfolios is its Tactical Asset Allocation (TAA) strategy, developed by XTF's CIO, Dr. Jeff Buetow, CPA, Ph.D., which allows the company to shift each asset class allocation by plus/minus 20 percent based on signals derived from its proprietary quantitative model. The TAA delivers integrated bullish or bearish signals for each asset class, based on 20+ market factors. For instance, if the TAA model produces a bearish signal for the US small-cap market, XTF will reduce the small cap allocation by 20 percent within a given portfolio; if the TAA model is bullish the international ETF equity exposure within the same portfolio, they will increase the allocation to that International ETF by 20 percent.
