A One-Stop, Active Multi-Asset ETF to Replace a Traditional Portfolio Mix

Investors have traditionally built their portfolios through a meticulous mix of various securities or funds. However, one can do it all through a simple multi-asset exchange traded fund strategy.

For example, the recently launched ClearShares OCIO ETF (NYSEArca:OCIO) is an actively managed portfolio of active and passive, index-based ETFs that acts as a play on the “outsourced CIO” concept.

Under the outsourced chief investment officer relationship, clients usually engage a third party provider to manage the investment portfolio. The third party is backed by a chief investment officer who leads a full investment team and operations support staff to optimize performance.

This outsourced CIO concept is seen as an institutional level strategy. A growing number of institutional investors have turned to outsourced investment solutions to access top investment talents and a broader range of traditional or alternative assets.

“ClearShares is a natural outgrowth of Clearbrook’s discretionary OCIO platform. Our investment process is collaborative and research-driven, directed by a team with multi-asset class, multi-market cycle experience on all sides of the institutional investment relationship,” Elliott Wislar, CEO of Clearbrook, said in a note. “We have listened to a growing number of investors and in response, we have developed an affordable ETF solution and made it available to the entire market.”

The ETF is managed by managing director Mark N. Hong, managing director Jonathan M. Chesshire, director Eric J. Blasberg and senior analyst Kevin M. O’Connor. The team will focus on tactical asset allocation and utilize their multi-asset class, multi-market cycle experience when developing a diverse portfolio to outperform a traditional 60/40 mix of global equity and fixed income investments.

“We believe the OCIO ETF has the potential to be a total or core portfolio solution for institutional investors, RIAs and individuals, without the resources to achieve comparable levels of professional management and diversification on their own,” Tom Deegan, Chief Operating Officer of Clearbrook Global Advisors, said in a note.

In its attempt to outperform a traditional portfolio mix of 60% global equity and 40% fixed-income investments, the active managers will invest in other registered investment companies, including other actively-managed ETFs and index-based ETFs, so OCIO will act like a fund-of-funds. The portfolio may be exposed to equity securities of U.S. or foreign companies, debt obligations of U.S. or foreign companies or governments, along with other investments like volatility indexes and managed futures.

OCIO will typically hold between 40% to 70% of total assets in equity securities and is free to target specific sectors of the economy. The fund will also typically hold between 20% to 50% of assets in debt obligations, including U.S. government debt, sovereign debt, U.S. and foreign corporate debt, high-yield debt, mortgage debt and structured debt.

The active managers will employ bottom-up fundamental analysis to target those with attractive absolute values and values relative to other asset classes, along with forward-looking, top-down macroeconomic analysis to identify areas of greatest potential for positive returns.

Current top holdings include d Vanguard Total Stock Market Index ETF (NYSEArca:VTI) 4.8%, Vanguard Growth ETF (NYSEArca:VUG) 4.6% and Vanguard Value ETF (NYSEArca:VTV) 4.5%.

The active ETF also comes with a relatively cheap 0.67% expense ratio.

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