A New Cayman Islands Shop Enters the U.S. ETF Biz
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Wednesday, October 18, 2023

A New Cayman Islands Shop Enters the U.S. ETF Biz

A startup in the Caribbean is entering the U.S. ETF space with help from a Long Island firm.

Yesterday, Ben Harburg, portfolio manager at Core Values Alpha (CVA) and at MSA Power Funds LLC, unveiled the launch of the CoreValues Alpha Greater China Growth ETF (CGRO on the NYSE Arca, Inc.). The new fund, CVA's first, is a series of Tidal Trust II.

Massapequa, New York-based Toroso Investments, LLC [profile] serves as investment advisor to CGRO, while Grand Cayman, Cayman Islands-based MSA Power Funds serves as subadvisor. The new ETF's PM team includes Tim Chen and and Harburg at MSA Power and Qiao Duan and Charles Ragauss at Toroso.

CGRO's inception date was Monday, and it comes with an expense ratio of 75 basis points (including a 14bps fee waiver promised through January 31, 2026). As of market close yesterday, the new fund had $2 million in AUM.

CVA is a product of PowerFunds, which in turn is an affiliate of China-focused MSA Capital, a $1.7-billion-AUM firm. CVA has 15 investment professionals in China, and actively managed CGRO is designed to invest specifically in the stock of companies operating in "Greater China," which includes mainland China, Hong Kong, and Taiwan. Stocks of interest to the PMs are first reviewed by CVA's China risk board, who give those companies a CVA China Risk Scorecard.

Harburg puts the launch of CGRO in the context of both his expectation of a long growth curve ahead of China and his certainty "that exposure to China must not be obtained through investment in companies or vehilces that compromise U.S. national security interests, American values, nor its position as a global economic and technological leader."

"We have created a rigorous, multi-layered approach with CGRO that helps ensure the companies in the fund's portfolio are positioned to deliver alpha, but not to the detriement of the U.S.," Harburg states. "Rather than seeking to replace China, investors should rethink the vehicles through which they are attaining China exposure, reweighting toward those that are actively managed and carefully navigating the landscape of China risks to ensure that American interests are not compromised."

The new fund's other service providers include: Cohen & Company, Ltd. as independent accounting firm; ACA's Foreside Fund Services, LLC as distributor; Sullivan & Worcester LLP as counsel; Toroso affiliate Tidal ETF Services LLC as administrator; U.S. Bancorp Fund Services, LLC (dba U.S. Bank Global Fund Services) as fund accountant, sub-administrator, and transfer agent; and U.S. Bank National Association as custodian.

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