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Rating:A Midwestern ETF Strategist Tests the Waters With Its Own Mutual Fund Not Rated 5.0 Email Routing List Email & Route  Print Print
Friday, August 26, 2016

A Midwestern ETF Strategist Tests the Waters With Its Own Mutual Fund

Reported by Neil Anderson, Managing Editor

A 13-year-old, Midwestern, tactical ETF strategist just launched its first mutual fund.

Thomas Hardin
Canterbury Investment Management, LLC
Managing Director / Chief Investment Officer
Tom Hardin, managing director and chief investment officer of Canterbury Investment Management, confirms that the Zionsville, Indiana-based RIA teamed up with Ultimus Fund Solutions to launch the Canterbury Portfolio Thermostat Fund. Canterbury dates back to 2003 and works with about $260 million in assets.

Canterbury's mutual fund, Hardin says, "is about creating and maintaining an efficient portfolio throughout all market environments." The Canterbury team's investing approach, he explains, is based around the idea that "every security will experience a bull and a bear market," and they watch for the indicators of each. He describes them as a "go-anywhere" manager that divides the ETFs they use into "global equities" and "alternatives to global equities" (alternatives including bonds, commodities, currencies, and even inverse indexes).

Canterbury invests in a universe of a little over 200 ETFs, Hardin says, and holds 10 to 14 of those ETFs in its portfolio at any given time. They use a rating and ranking system to evaluate those 200-plus ETFs. They have been running the strategy in separately-managed accounts, yet now they're trying for the mutual fund structure.

"The mutual fund form I think is much simpler for individuals," Hardin tells MFWire. "It's more efficient just to have a fund that you know is one unit as opposed to the moving parts."

The fund, Hardin says, is "kind of designed to be a core" portfolio holding.

"Our primary objective of the fund is to limit drawdowns in a normal bull market correction," Hardin says. "The ETF holdings have to kind of move in concert with the changing environment."

The Canterbury team initially started working with the Huntington Asset Services, Inc. (HASi) team. Yet Ultimus bought HASi in a deal that closed on December 31, 2015, so Canterbury became an Ultimus client while working with the same team.

Jeff Young, vice president and director of relationship management at Ultimus (and former president of HASi), praises Canterbury as "a perfect fit" for Ultimus' Capitol Series Trust.

HASi was "always very committed to the startup mutual fund" of the business, Young tells MFWire. "Ultimus continues that commitment ... We still have that belief that boutique managers deserve a shot at the mutual fund business."

On the distribution side, Chicago-area RIA Brookstone Capital Management (with about 300 IARs) has been one of Canterbury's primary distribution channels.

"We're on their platform. We do a lot of training of advisors," Hardin says. "This whole process, it's an evolution of how we look at portfolio management. It's as much a philosophy as it is a process."

Canterbury also distributes via the TD Ameritrade platform, and they're aiming for Schwab, too. They're "focusing on RIAs" with the mutual fund, at least for now, though they do have a broker-dealer-friendly investor share class coming soon. Ty Needler, an Invesco PowerShares and Elkhorn veteran, has recently joined Canterbury to lead distribution.

"He's taking the lead in getting the contacts, working on getting on the platforms," Hardin says. "What we really like to do is go through an educational process first." 

Correction: A prior version of this story gave the wrong age and launch year for Canterbury Investment Management. Canterbury dates back to 2003 and is thus 13 years old.

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