Sign In  |  Register  |  About Mill Valley  |  Contact Us

Mill Valley, CA
September 01, 2020 1:29pm
7-Day Forecast | Traffic
  • Search Hotels in Mill Valley

  • CHECK-IN:
  • CHECK-OUT:
  • ROOMS:

F/m Investments Files Exemptive Application Seeking Major Asset Management Industry First – Mutual Fund Share Class Relief for an Existing ETF Family

News comes as US Benchmark Series celebrates one-year anniversary; surpasses $2.2 Billion in assets

F/m Investments LLC (“F/m”), a wholly owned subsidiary of Diffractive Managers Group, LLC, today announced it filed a novel exemptive application with the U.S. Securities Exchange Commission (the “SEC”), seeking an order that would permit each of the ETFs in the US Benchmark Series – a suite of 10 ETFs designed to simplify access to the US Treasury market – to offer a mutual fund share class. The exemptive relief requested by the application is the first of its kind sought within the ETF industry and, if granted by the SEC, has the potential to make the US Benchmark Series accessible to investor segments that today can only access mutual funds.

Creating a mutual fund share class for each of these ETFs would significantly broaden their distribution opportunities while solving an accessibility problem for certain 401(k) participants and other investors who cannot otherwise hold ETFs. Additionally, the mutual fund share class of the US Benchmark Series would be made available in a daily accrual offering, subject to obtaining exemptive relief from the SEC, expanding investor choice in accessing fixed income returns in ‘40 Act product.

“While much of the discussion in the fund world recently has focused on mutual fund to ETF conversions, investors who primarily use mutual funds should not be ignored. Investors stand to benefit immensely from this ground-breaking dual share class structure — adding mutual fund capability to a suite of ETFs,” said Alexander Morris, F/m’s President and CIO. “We believe the simplicity of the US Benchmark Series can address legitimate concerns raised by the Staff and benefit shareholders of both share classes.”

In today’s filing, F/m outlines distinct considerations attributable to the exemptive relief sought for the US Benchmark Series:

  • The mutual fund share class would have the same unitary fee as the existing ETFs.
  • The existing ETFs are fully transparent and their portfolios consist of U.S. Treasury securities, cash and cash equivalents, significantly mitigating front-running concerns.
  • The cash drag associated with holding the cash necessary to satisfy mutual fund share class redemptions would not be applicable given the underlying portfolio holdings of the US Benchmark Series consist of highly-liquid U.S. Treasuries, cash and cash equivalents.
  • The implicit brokerage costs associated with buying and selling U.S. Treasury securities in response to mutual fund share class flows is expected to be nominal due to the highly-liquid nature of the U.S. Treasury market.
  • U.S. Treasury investment strategies provide for greater flexibility and efficiencies with respect to portfolio tax management, thereby mitigating concerns related to distributable capital gains associated with portfolio transactions.

The potential launch of a mutual fund share class for this ETF family comes on heels of the one-year anniversary of the launch of the first US Benchmark Series ETFs and is another novel and innovative development from F/m, the team that pioneered the first single-bond ETF. The US Benchmark Series proved so useful to investors that they amassed, collectively, over $2.2 billion in net assets in less than a year. F/m, with a long history of serving mutual funds and its successful launch of ETFs, is strongly positioned to serve both ETF and mutual fund investors.

Representing F/m in the preparation of the exemptive application is Kelley Hunt & Charles LLC (“KH&C”), a highly-experienced provider of legal services to institutional asset managers, investment funds, and their boards. KH&C is well-versed in navigating the ‘40 Act landscape for asset managers. KH&C was engaged by F/m due to their unique knowledge of, and direct experience in advising on, novel ETF initiatives.

“We appreciate the SEC’s time and consideration of the exemptive application and look forward to continuing to work with the Staff in seeking this historic exemptive relief,” said Aisha Hunt, Founder of KH&C.

Due to the first-of-its kind nature of the exemptive relief sought by the application, a provisional patent application has been filed for protection purposes. Alexander Morris and Craig Urciuoli are co-inventors, with intellectual property rights assigned to a newly created administration company.

About F/m Investments

F/m Investments is a registered investment advisor and a wholly owned subsidiary of Diffractive Managers Group, LLC. For more information, please visit www.fm-invest.com.

About Diffractive Managers Group, LLC

Diffractive Managers Group, LLC (“Diffractive”) is a private multi-boutique asset management company with centralized distribution and operational support whose affiliates manage more than $24 billion in total AUM. Diffractive’s expertise lies in identifying unique and innovative investment strategies and uncovering partnership opportunities where centralized distribution can drive significant growth. For more information, visit www.diffractivemanagers.com.

About The US Benchmark Series

The US Benchmark Series is a suite of 10 ETFs that each provide investors of all sizes with exposure to one of the “Benchmark” US Treasury securities in a single-security ETF. Each ETF holds the most current (“on the run”) US Treasury security that corresponds to its stated tenure. For more information, please visit (www.ustreasuryetf.com).

About Kelley Hunt & Charles, LLC (KH&C)

KH&C leverages extensive asset management legal and industry experience to provide practical and cost-effective legal services to institutional asset managers, investment funds and their boards. The firm specializes in helping asset managers with all legal aspects of launching, converting/merging and managing ETFs, mutual funds, interval funds, BDCs, CITs, SMAs and other investment products across a wide variety of asset classes. KH&C is a majority women- and minority-owned law firm that was founded by Aisha (Kelley) Hunt.

Disclosures:

Investors should consider the investment objectives, risks, charges and expenses of each of the US Benchmark Series ETFs carefully before investing. For a prospectus or summary prospectus with this and other information about a US Treasury Series ETF, please call 1-800-617-0004 or visit our website at www.ustreasuryetf.com. Read the prospectus or summary prospectus carefully before investing.

As with all ETFs, shares of each of the US Benchmark Series ETFs may be bought and sold in the secondary market at market prices. Interest rate risk is the risk of losses attributable to changes in interest rates. In general, if prevailing interest rates rise, the values of debt instruments tend to fall, and if interest rates fall, the values of debt instruments tend to rise.

Investments involve risk. Principal loss is possible.

Distributed by Quasar Distributors, LLC

Contacts

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
 
 
Copyright © 2010-2020 MillValley.com & California Media Partners, LLC. All rights reserved.