PMV Capital Advisers has launched the PMV Adaptive Risk Parity ETF (NYSE Arca: ARP), an actively managed fund that seeks to generate capital appreciation, with lower volatility and reduced correlation to the overall equity market, by taking advantage of broad asset class trends throughout the market cycle.
According to the issuer, ARP was designed to provide exposure to asset classes not typically found in traditional stock and bond portfolios, diversifying the sources of returns to provide upside potential in various macroeconomic environments.
The fund attempts to achieve its objective by following PMV’s TrueDiversification process. This rules-based, systematic process begins with the tenets of risk parity, a style of asset allocation that seeks to maximize diversification by combining assets with low correlation to one another and similar expected risk profiles. The fund attempts to improve upon a static risk parity portfolio by adapting to momentum trends to capture the risk premiums of positively trending assets, while mitigating losses from negatively trending assets.
“We see an opportunity in the marketplace for an all-weather strategy that has low correlation to the broad stock market,” said Daniel Snover, portfolio manager, in a news release. “Investors today are looking for ways to diversify their portfolio beyond traditional stock and bond positions.”
ARP has a net expense ratio of 1.38%.