By Christine Eadleys
Hello! In this week’s ETF roundup, Motor No. 1 CEO Jennifer Grancio spoke with MarketWatch about the firm’s recent hire from a hedge fund and how that fits with the firm’s strategy to target investment opportunities with “big change” themes.
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Motor’s No. 1 actively managed exchange-traded funds are tapping former hedge-fund talent to target “massive transformational investment opportunities,” said Jennifer Grancio, the firm’s chief executive.
Eli Horton, who joined Motor No. 1 from hedge fund firm Maverick Capital over the summer, will be the lead portfolio manager for active ETFs, Grancio said in a phone interview. According to a Securities and Exchange Commission filing in June, the company was preparing to launch an actively managed ETF that aims to “invest in companies that create value through supply chain transformation.”
Horton said that in July he joined Motor No. 1 Maverick, where he was the managing director and in eight years in the company, he focused a lot on the industrial economy. He said he met Motor No.1 founder Chris James a year ago and got to talking about the couple’s “seismic shifts” in the world, including energy transitions and the environment of supply chains, which were still in the “very early innings”. .
Horton’s “former hedge fund background, strong investment capabilities” and deep experience in the markets related to such transitions put him in a position to lead the construction of actively managed ETFs at Engine No. 1, Grancio said. Former founding member of BlackRock’s iShares business.
Active ETFs are a growing segment of the ETF industry, which is still dominated by mutual funds and has benefited from the mutual fund migration. BlackRock’s iShares business, which consists of ETFs, is one of the industry’s heavyweights.
Read: Why BlackRock Sees These Thematic ETFs That Could Outperform in 2023
In Grancio’s view, “we are at an important inflection point where investors who have built portfolios around indices heavily weighted in Big Tech are looking to capitalize on a major shift in the economy over the next decade.”
According to Horton, the “relocation” of supply chains is one way to create investment opportunities.
The COVID-19 crisis has seen the world’s supply chains change after he described how “weak” it was after forty years of companies looking to cut manufacturing costs by turning to cheap labor in countries like China. That “helped make low-cost goods more readily available,” he said, but “now it’s broken,” with many people experiencing the “pain” of that during the pandemic.
“Every manufacturing business that I talk to is very, very focused on this problem,” Horton said, “and they’re looking for ways to bring their manufacturing supply chains closer to the sources of demand.” He has been looking at “compelling investment opportunities” such as manufacturing, automation and transportation.
“North America is likely to be the place to re-examine large-scale supply chains,” Grancio said.
With such “seismic” swings in major investment themes, Horton says he likes to put his “deep, down-and-out” research and analytical skills to work to identify potential “winners” in the stock market.
The firm currently offers the No. 1 Engine Change Climate ETF (NETZ), an actively managed exchange-traded fund, according to Grancio.
Engine No. 1 declined to comment on when the Transforming Supply Chain ETF might launch. A June filing with the SEC shows the fund will be listed on the Cboe BZX exchange.
Read: ‘The best, hottest and funnest cars of the year will be battery electric’: Motoring’s No.1 boss on what’s next for ESG investing
Meanwhile, shares of the No. 1 Transform Climate ETF, which launched in February, were down about 3 percent in Thursday afternoon trading, according to FactSet data. Currencies sold off amid sharp stock market declines after the Federal Reserve’s decision on Wednesday to raise its benchmark rate by 50 basis points as it continues its fight against high inflation.
For example, shares of the SPDR S&P 500 ETF Trust ( SPY ) fell 2.4% Thursday afternoon, while the Invesco QQQ Trust ( QQQ ), which tracks the Nasdaq-100 index, fell 3.4%.
Here’s the usual look at the top and bottom performing ETFs from last week through Wednesday, according to FactSet data.
Top Performers %Performance United States Oil Fund LP USO 7.4 United States Natural Gas Fund LP UNG 6.7 WisdomTree Cloud Computing Fund WCLD 5.7 iShares S&P GSCI Commodity Indexed Trust GSG 5.3 Global X Cloud Computing ETF CLOU 4.6 Source: FactSet data through Wednesday, Dec. 14, excluding ETNs and leveraged products. Includes NYSE, Nasdaq and Cboe traded ETFs of $500 million or greater
… the worst
Bottom Performers %Performance iShares U.S. ETF Trust iShares GSCI Commodity Dynamic Roll Strategy ETF COMT -20.3 KraneShares Bosera MSCI China A 50 Connect Index ETF KBA -19.7 AdvisorShares Pure US Cannabis ETF MSOS -15.7 iShares MSCI Taiwan ETF EWT -15.2 iShares MSCI Brazil ETF EWZ -11.7 Source: FactSet
Weekly ETF is read
– Christine Eadleys
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