ProShares, the largest issuer of inverse and leveraged ETFs, continues expanding its lineup of non-leveraged offerings with Thursday’s launch of the ProShares Morningstar Alternatives Solution ETF (NYSEArca: ALTS).
The new ETF is designed to be a complement to traditional equity and fixed income portfolios by enhancing risk-adjusted returns. ALTS is the only ETF based on a Morningstar index comprising a broad range of alternative strategies, according to a statement issued by Maryland-based ProShares.
ALTS, which tracks the Morningstar Diversified Alternatives Index, is an “ETF of ETFs” as its seven holdings are other ProShares ETFs, including a 5.9% weight to the ProShares Managed Futures Strategy (NYSEArca: FUTS), which debuted last week. [ProShares Launches Managed Futures ETF]
Managed futures strategies are also used in asset classes such as bonds and currencies, aiming to garner value in a variety of market conditions. Managed futures portfolios have historically provided risk-adjusted returns comparable to those of stocks with low correlation to the stock and bond markets, according to ProShares.
The largest holding in ALTS is a 24% weight to ProShares RAFI Long/Short ETF (NYSEArca: RALS), which is based on strategies developed by the “father of fundamental indexing,” Rob Arnott. That is followed by a 22.2% weight to the ProShares Hedge Replication ETF (NYSEArca: HDG), another long/short ETF aimed at damping market risk. [Alternative ETF Strategies]
ALTS also features an 18% allocation to the ProShares Global listed Private Equity ETF (BATS: PEX) and a 16.3% weight to the ProShares DJ Brookfield Global Infrastructure ETF (NYSEArca: TOLZ), which debuted in March.
TOLZ “focuses on companies whose assets include airports, toll roads, ports, communications, electricity distribution, oil and gas storage and transport, and water in both developed and emerging markets. To be included in the index, companies must derive more than 70% of their cash flows from infrastructure assets. The index excludes companies that supply services such as construction and engineering to the infrastructure industry,” according to ProShares. [Global Reach With Infrastructure ETFs]
ALTS’ other two holdings are the ProShares Merger Arbitrage ETF (NYSEArca: MRGR) and the ProShares 30 Year TIPS/TSY Spread (NYSEArca: RINF).
For at least the first two years following the launch of the ProShares Morningstar Alternatives Solution, all investment advisory and management service fees will be waived, said the issuer in the statement. The ETF has a net expense of 0.95%, according to issuer data.
ETF Trends editorial team contributed to this post.