Cedar Capital’s Broadmeadow Capital unit will acquire assets from exchange traded funds strategist F-Squared, which voluntarily filed for Chapter 11 bankruptcy protection today in Delaware.
According to a statement, Chicago-based Broadmeadow Capital said “it has signed an agreement to acquire the intellectual property, investment strategies and investment management contracts of F-Squared Investments.”
In December, F-Squared agreed to pay $35 million and admit wrongdoing to settle charges it falsely advertised historical returns for the firm’s flagship ETF strategy, the Securities and Exchange Commission said.
“The SEC separately charged the firm’s co-founder and former CEO Howard Present with making false and misleading statements to investors as the public face of F-Squared,” said the Commission in a statement. [Changes at the Top at F-Squared]
In November, Present left the firm and was replaced by Laura Dagan. In May, Virtus Investment Partners (NasdaqGS: VRTS) said it replaced F-Squared as a subadviser on five AlphaSector mutual funds. In April, it was reported that F-Squared is looking for a buyer or a strategic partner, which could help with the firm’s rebranding efforts, particularly if a buyer opts for a majority stake of the strategist. [F-Squared Reportedly Looking for a Buyer]
ETF managed portfolios are investment strategies that hold more than 50% of assets invested in ETFs. A group of ETF Strategists package portfolios of ETFs into investment strategies to meet a wide range of investor demands, providing stand-alone investment strategies or a one-stop complete offering. Many portfolios can be adjusted to adapt to changing market conditions and most employ a rules-based process based on technical or quantitative factors.
Broadmeadow is run by President David Cabot and Chief Investment Officer Eric Biegeleisen, both of whom are alumni of Windhaven Investment Management, one of the largest ETF strategists.
Broadmeadow’s strategies include an enhance global commodity strategy that “seeks to outperform the S&P GSCI Total Return Index by investing primarily in global commodity-focused exchange traded products. This includes physical metals, commodity futures (both static and dynamic), and commodity-related equity exposures,” according to the company.
The firm’s enhance global equity strategy attempts to outperform by investing in U.S., developed and emerging markets ETFs. Broadmeadow’s fixed income strategy uses domestic and international treasuries, sovereigns, investment grade and high yield corporates, and floating rate note ETFs in an effort to top the JP Morgan Global Aggregate Bond Index.
ETFs used across F-Squared strategies include the iShares MBS ETF (NYSEArca: MBB), Technology Select Sector SPDR (NYSEArca: XLK) and the First Trust Emerging Markets AlphaDEX Fund (NYSEArca: FEM). [F-Squared Down, but not Out]