Merlin AM launches dynamic large cap growth ETF on NYSE

Nov 28th, 2017 | By | Category: Equities

Merlin Asset Management has unveiled the Fieldstone Merlin Dynamic Large Cap Growth ETF (FMDG US), the firm’s first ETF, on NYSE Arca. FMDG is actively managed by veteran large cap growth equity manager Dr Michael Obuchowski, founder and chief investment officer of Merlin AM.

Dr Michael Obuchowski, founder and chief investment officer of Merlin Asset Management.

Dr Michael Obuchowski, founder and chief investment officer of Merlin Asset Management.

“We are excited to offer one of Merlin’s established large cap growth investment strategies in an active ETF format,” said Obuchowski. “With changing market and economic conditions, FMDG is positioned well for the future, while the combination of true active management with full transparency and intraday liquidity makes active ETFs an attractive investment vehicle for both individual and institutional investors.”

The fund targets a low-turnover approach to investing in a concentrated portfolio of large cap growth companies listed on US exchanges. Utilizing a structured, repeatable investment process, Merlin AM combines bottom-up, top-down and quantitative evaluation with a focus on valuation relative to expected long-term earnings growth rates. All holdings will be individual US-listed equity securities, with market capitalization typically above $5 billion. The fund’s benchmark is the Russell 1000 Growth Index.

FMDG’s portfolio currently consists of just 25 holdings where each constituent accounts for an approximately equal share of the total weight – the largest holding is LAM Research (4.7%) and the smallest is Berry Global (3.1%). Merlin AM expects that, under normal market conditions, the weight of the portfolio will be allocated equally across all holdings. The fund’s sector exposures are currently dominated primarily by technology (50.3%), followed to a lesser extent by consumer cyclical (19.3%) and healthcare (18.9%).

FMDG has a total expense ratio of 0.80% due to a contractual fee waiver in place until at least 31 August 2018; its gross expense ratio is almost double this at 1.53%.

According to Merlin AM, FMDG may be used as a core holding, providing investors with exposure to companies that the firm regards as market leaders among high quality, fast growing large companies trading at attractive valuations. Alternatively, FMDG may serve as a high-growth complement to passive, index-oriented strategies, potentially enhancing returns.

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