Northern Lights Rolls Out Five QuantX Smart Beta ETFs

Traditional open-end mutual fund provider Northern Lights is stepping into the exchange traded fund arena under the QuantX suite and rolled out five smart index-based strategies advised by Blue Sky Asset Management.

On Thursday, Northern Lights added the QuantX Risk Managed Multi-Asset Income ETF (BATS: QXMI), QuantX Risk Managed Multi-Asset Total Return ETF (BATS: QXTR), QuantX Risk Managed Real Return ETF (BATS: QXRR), QuantX Risk Managed Growth ETF (BATS: QXGG) and QuantX Dynamic Beta US Equity ETF (BATS: XUSA).

QXMI has a 0.79% expense ratio. QXTR has a 1.25% expense ratio. QXRR and QXGG have a 0.95% expense ratio. XUSA has a 0.59% expense ratio.

The five ETFs will incorporate various proprietary strategies from Blue Sky Asset Management, which were originally developed over the past several years and previously only available to investors in a separate account.

“Investors don’t have an infinite time horizon, which is one of the main reasons we find traditional modern portfolio theory-based approaches to be sub-optimal,” David Varadi, a Partner and Director of Research at Blue Sky, said in a note. “Our dynamic, quantitative approach provides for a more rapid response to changing markets, while filtering out the emotions that can have a negative impact on decision-making. We have built this intellectual property into the indexes underlying the QuantX ETFs.”

Specifically, XUSA will follow a type of dynamic beta strategy while QXMI, QXGG, QXRR and QXTR will take a risk-managed approach.

The Dynamic Beta US Equity ETF selects large- and mid-cap stocks taken from the Russell 1000 but includes a screening process designed to increase exposure to those that have the highest estimated upside volatility relative to downside volatility.

“With XUSA, investors are able to capture key asymmetries in the US equity market, by identifying opportunities for upside participation and lowering downside risk,” Varadi said.