Arrow Investment Advisors, based in Olney, MD, is readying the Arrow Balanced ETF, the Arrow Tactical ETF and the Arrow Tactical Yield ETF, according to a filing with the Securities and Exchange Commission.

The Balanced ETF seeks to achieve an appropriate balance between long-term capital appreciation and capital preservation. The Tactical ETF seeks to achieve long-term capital appreciation with capital preservation as a secondary objective.

Both ETFs primarily invest in other ETFs that each invest primarily in (i) equity securities, (ii) fixed income securities, or (iii) alternative assets; as well as in (2) commodity futures and (3) options on commodity futures, according to the filing.

The Balanced ETF will normally have from 25% to 65% invested in equity securities, and the same percentages for fixed income. From 10% to 40% can be invested in alternative assets.

The Tactical ETF can invest from 0% to 100% in equity securities, including ETFs that invest in domestic and international, including emerging markets, equity securities; from 0% to 100% of its assets in fixed income securities of any maturity and credit quality and from 0% up to 90% of its assets in alternative assets, according to the filing.

The Arrow Tactical Yield ETF seeks to generate a high level of income while providing some potential for capital growth primarily through exposure to a portfolio of fixed income and high yielding equity securities.  The fund primarily invests ETFs that each invest primarily in foreign and domestic (i) equity securities, (ii) fixed income securities, (iii) REITs and (iv) currencies.

The fund will maintain two income strategies that focus on securities that generate high beta and low beta, respectively.

The high beta strategy is a composite of securities that are selected based on their credit and equity risk premiums. The low beta strategy is a composite of securities that are selected based on their inflation, interest and credit risk.

The fund uses a proprietary selection methodology designed to identify securities that demonstrate strong relative strength characteristics within each strategy.  The fund will then utilize a quantitative methodology that relies on economic and fundamental factors to tactically underweight and overweight the income strategies, the filing says.

Allocation to each strategy can range from 20% to 80%, according to the filing.

All three funds will be managed by William E. Flaig Jr., CIO, and Adrian Bachman, portfolio manager, according to the filing.

 

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