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Thursday, April 1, 2021

April Fools For Fundsters
Guest Column by: Neil Bathon

Editor's Note: MFWire interrupts our regular news coverage to bring you this special annual April Fools' Day message from the folks at Fuse Research Network. If you need a few laughs and a break from the news, read on ...

And yes, to be clear, this article is fake news. But what if ...


Thomas Neil Bathon
Fuse Research Network
Founder, Partner

Top News Items Selected by FUSE

Vanguard Files for Variable Transparency Filter

Vanguard has filed a request with the SEC to apply a variable transparency filter to its ETFs (patent pending). The Vanguard Research Initiative (a collaboration between NYY, Univ. of Michigan, and Vanguard) determined that there are no more than 3 days per year when the average portfolio might benefit from shielding its holdings from the prying eyes of the hoard of front-runners that are believed to be waiting in the wings. A company spokesperson stated, on the condition of anonymity, "The ability to turn transparency on and off is an incredible tool that literally saves investors from 0.05 to 0.12 basis point a year."

Latest V-A-P Offers COVID-19 Vaccine

Infusive Asset Management, IVA Funds, and Ryan Labs have formed a tri-party marketing group to spread the word about their innovative value-add program to offer COVID-19 vaccines for those that make at least a $50,000 new investment in one of their funds. The campaign was originally intended for end investors, but brokers with full discretion over client holdings are reported to have accounted for all the available supply. (Wrona Investment Management's request to participate was denied.)

BCofA Announced "Top-Most Differentiated Positioning" Contest

The Brand Council of America (BCofA) has announced the winners of its annual "Top-Most Differentiated Positioning" contest for investment firms. Now in its 15th year, BCofA employs an approach in which they first identify the words that they believe to be the best at articulating a unique value proposition to clients. With this information, the group sets about to identify the firms that utilize the statements as central to their principles, missions, and beliefs. For 2020, the selected phrases were "Client Centric," "Research Focused," and "Corporate Responsibility," which resulted in 177 winners (click the link to see the full list of firms www.bcofam.org/2020winners).

Who Gets to Decide?

Barron's is under fire again for its insistence that they alone are the final authority on what constitutes a "family." There are no fewer than 80 investment firms that are eliminated from consideration, shut out of the family conversation if you will, simply because they choose not to offer a traditional municipal bond strategy tied to an antiquated rule that was developed in the 1933s and 1940s. The folks at ProShares (they offer almost 200 funds but do not qualify as a complete household) have started a ProFamily charitable foundation whose sole purpose is to force Barron's to remove the hurtful, damaging, and exclusionary restrictions that limit opportunity for so many.

"Top Advisor" Rankings


The market for "Top Advisor" rankings has taken an unexpected turn with news the group behind "Who's Who" (Marquis) has nominated all 160,000 financial advisors in the U.S. for inclusion in their 2021 "Who's Who in America: Financial Advisors Edition." No specific details are being offered as to the selection criteria except that it is known that the R.J. Shook standard "acceptable compliance record" is being utilized. Some question the merit of weighting this factor so heavily given the fallout, lawsuits, and subsequent awards paid by Financial Times in their "Top Doctors" and "Top Attorneys" ratings where the "minimal malpractice incidents" standard was applied.

New Product Developments

Crypto Art

In a sign that all things crypto are gold and perhaps inspired by the recent sale of a piece of crypto art for $69 million, FirstTrust has filed to launch a first of its kind "crypto art" investment fund. The fund will seek to generate profitable returns by acquiring and selling electronically derived works of art from previously undiscovered "digital artists."

Rationalization Spills Over to ETFs

As the ETF landscape has become increasingly crowded, ETP sponsors are rationalizing their product lines. COW (DJ-UBS Livestock Total Return Sub-Index ETN) will be merged with CAFÉ (Pure Beta Coffee ETN). The new symbol will be LATTE. Also, Starbucks (NASDQ: SBUX) has stepped into the ETF market by blending CANE, the Sugar ETF, with the highly concentrated JOE (Dow Jones-UBS Coffee ETN) — the new product has been assigned the ticker HYPR.

JPMorgan Checkmates Facebook

JPMorgan has solidified its reputation as a true chess player in the financial services arena by foiling Facebook's plan to penetrate the asset management industry with the launch of a new Gen Z fund that is primarily focused on the true necessities among youth today. VIBE Long/Short Equity Fund's (VIBE) mandate will be dedicated to investing in equities with significant exposure to video games, marijuana, alcohol, energy drinks, social media, cryptocurrency, and other highly addictive goods. In a rather bitter statement, Facebook denounced the behemoth's move as "monopolistic sentiment" and an obvious attempt to undermine its own efforts to provide guidance for the next generation. The remaining question among speculators is whether or not Facebook will become a core holding in the VIBE portfolio.

Spotlight on Guinness Atkinson

Guinness Atkinson, after seeing no incremental interest in its investment offerings, has decided to convert its converted ETFs back to mutual funds. Some in the industry have speculated that this masterful marketing move, in terms of continued coverage for a firm that has almost no other reason to be in the press, will bring a CMO of the Year nomination for Jim Atkinson, who is principal at Orbis Marketing and president of Guinness Atkinson Funds.

Shrooms, Anyone?

Everyone is obsessed with magic mushrooms. Not only are they on their way to being legalized in Oregon and Washington, DC, but NYU is launching a $10 million Center for Psychedelic Medicine. As such, it was only a matter of time before mushroom-related ETFs made their debut. Following the success of their cannabis ETF (TOKE), Cambria Investment Management plans to launch SHRM (or TRYP), a psychedelics-related ETF, in Q321.

Royal Announces Split

Royal London Asset Management announced a reverse share split. The Institution, run by Elizabeth Windsor since 1952, reminded loyal shareholders that this is not a coercive or bullying tactic designed to bring PMs or others into line, but rather recognition of the inevitable return of the prodigal son to oversee the portfolio holdings of this rather large family office.

New Service & Support Offerings

Digital Engagement Tool

Millennial Investing App calculates student debt in increments of "years spent at your parents' home," but with an overlay derived from crowdsourcing all investment ideas from the user's social media connections and news sources (read Reddit) and employing an algorithm that favors those in one's network who get the most likes and shares for selfies and cute-pet posts. The app also offers a beta version with budgeting tools that offer the ability to toggle between "reality" and "my fantasy" settings.

Press Release: Boston Dynamics Announces the Launch of its Newest Robot RYBRID

Boston Dynamics' new fund wholesaler robot RYBRID (looks like Hybrid, pronounced like Rye Bread) comes ready to operate, right out of the box, and includes lifelike facial features. With its flexible API and payload interfaces, RYBRID can be customized for any distribution channel, including DC I-O and wirehouses. This innovative technology solves national sales managers' many challenges ranging from ETF compensation, to T&E costs, to product training, and social distancing. These robotic wholesalers come equipped with self- charging capabilities and the RYBRID Dock, allowing them to perform data collection and be quickly programmed with new fund information and current capital market insights, and enabling national sales managers to control their fleet of RYBRIDS from the comfort of their home office. Priced at $500,000 for the basic model, the break-even on RYBRID is significantly less than two years for most firms. It ships in just 12 to 16 weeks and can be deployed in the field immediately for in-person meetings. For an extra $1,000 fee, RYBRID can come equipped with a feature that replicates a critical skill of most real-life wholesalers — a golf option that can ensure the advisor with which RYBRID is paired is on the green in regulation every hole.

Google and Facebook Join Forces

Big tech is finally breaking into the asset management industry. Google and Facebook (G&F) have joined together to create a retirement platform based on their disruptive new take on the target-date fund market. Instead of defaulting participants into age-based vintages, the platforms use algorithms that places investors into funds based on their online activity. The glidepaths treat them like more than just an age, since none of their participants will ever be able to retire. Some of the "vintages":
  • G&F Cancel Culture Fund — Twitter hashtags drive short bets; objectives include negative total returns to satisfy investor demand for outrage; investment time horizon is 15 minutes
  • G&F QAnon Fund — Investors who believe the Deep Value state is pulling the strings for the market; investing time horizon is a random single date in the future, but gets repeatedly extended
  • G&F Tom Brady Fund — Infinite investing time horizon; shorts companies based in the Northeast.


  • Artificial Intelligence: Bill Gross Celebrates His Legendary Investing by Creating an AI Lookalike

    Bond guru Bill Gross has created an AI likeness of himself that can predict bond market moves and interact with investors and journalists for decades into the future. Background music features the soothing theme song from "Gilligan's Island" on an unending loop. Gross follows where William Shatner has gone before in his recent Trekkie-into-Perpetuity move, with Bill G. now becoming only the second person to be featured in an AI-powered video.

    Marketing Tactics

    Celebrity Sponsorships

    The ETF world is abuzz with celebrity sponsorships. Prompted by the recent announcement that Invesco QQQ is "proud to be the official ETF of the NCAA" and inspired by its tagline "You don't have to be courtside to feel the excitement," other ETF sponsors are jumping on the bandwagon. Global X has hired Bruce Springsteen, whose White Claw opportunity recently fell through, as the pitchman for its Founder-Run Companies ETFs (BOSS). Its tagline will be simply, Glory Days (of course, compliance has not yet approved it). In light of the recent controversy over a certain unnamed manager's announcement that Barstool Sports founder Dave Portnoy would be hawking its ETFs, and the unconfirmed news that First Trust made a last-minute decision to forgo hiring Prince You-Know-Who to pitch the First Trust Aristocrats Only ETF (ROYL), some managers want to avoid the risks tied to celebrity sponsorship altogether. This next bit of news was shared confidentially and is For Your Eyes Only — iShares has selected fictional character 007 (The Sean Connery version) to pitch SPY2 (iShares Bond ETF).

    Unfortunate Branding Decisions:


      1. Hydra Asset ManagementAll things, to all people
      Strongly client-centric and collaborative, but fiercely research focused; dedicated to your individual needs, as only a manager of global scale and presence can deliver; we ensure that our exceptional independence and expertise delivers unparalleled value, across our low-cost product array.
      2. House of Windsor InvestmentsYou just think you know us
      Centuries of growth and success built on timely real estate acquisitions and strategic partnerships, the firm's vast portfolio is held in a non-transparent trust
      3. Leatherback Asset ManagementLike clockwork, we lay an egg once every 3 years
      4. 2nd Vote FundsWith a partnership with the NRA this may be one of the most targeted ...

      Distribution Trends

      Latest FA Insights

      FUSE's most recent Advisor Trend Monitor survey results show that financial advisors are high on the prospects of Cannabis-related ETFs. Jeff Spicoli of Ridgemont High Advisors stated, "Based on our conversations with clients, we believe these vehicles will totally smoke the other categories." He also noted that he is long on Pepsi (NASDAQ: PEP), owner of Doritos and Yum Brands (NYSE: YUM).

      BlackRock Announces Hybrid Move

      In a move that is being applauded for its candor and clarity, BlackRock has announced that all its field wholesalers are being converted to hybrids (in name only) so that the firm can justify reducing compensation by 25 percent to 40 percent. No other change in engagement is expected as BlackRock reaffirmed its commitment to maintaining the highest standards of service and support to the advisor community.

      Market Entrants

      Levys Enter Marketplace

      Looking to capitalize on the success, name recognition, and story line of riches-to rags-back to riches of the TV series, Schitt$ Creek, show creators Eugene and Dan Levy have partnered with a former Canadian investment management firm CEO to launch Schitt$ Creek Capital Management. The firm plans to raise funds that will invest primarily in real estate including run down motels, auto repair shops, general stores, and cafes in small towns across Canada. The Levys have stated that over the course of filming Schitt$ Creek in small town locations they realized there was an opportunity to make a "schitt" ton of money in small town real estate.

      Alphabet Soup

      The long-anticipated disruptive entry of technology firms into asset management looks to be just around the corner. Alphabet (NASDAQ: GOOGL), Google's parent company, is rumored to be in talks to acquire an asset manager or two in an effort to create a foothold. Early reports mentioned AQR, PGIM, CMG, DWS, JOHCM, ACM, MFS, BBH, BMO/CIBC, TCW, AB, SEI, CMG, GMO, SIT, FPA, HSBC, TIAA, and UBS as possible targets.

      Mergers & Acquisitions Rumors

    • Prospector and Diamond Hill to combine forces as Uncut Gems to be run by H. Gilmore

    • Upon completion of a more thorough review, it has been determined that Amana Funds and Ave Maria Funds are not nearly as compatible as had originally been hoped, and the merger talks have been called off indefinitely

    • 3930 Investment Management LLC is being formed from the four predecessor firms of 1290 Funds, 1919 Funds, 360 Funds, and 361 Funds

    • In a deal that has been expected for some time, the executives of Distillate Capital, Absolute Capital, Absolute Strategies, and Absolute Investment Advisers have agreed to liquidate and move their assets to that team at Hennessy (who recently added AMF to their lineup), which was the only viable option for leadership of such an enterprise

    • In another case of fending off unwanted suitors, Cathie Wood of ARK has informed Anchor Capital and Ballast Asset Management that she sees no value in adding them to a platform she specifically built for speed and agility

    • Last year's highly touted deal between Exponential, Flex, and Fulcrum was deemed to render the combined entity virtually useless, unworkable if you will, and is being unwound


    • Neil Bathon is founder and partner at Fuse Research Network, a consulting and research firm that supports asset managers. 


      Guest Column


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