Sage Quant Files To Offer ETFs
May 30, 2012
Sage Quant Management, a firm that lists its business address in Connecticut, filed paperwork to gain regulatory permission to market ETFs, the first of which would be a low-volatility dividend-focused strategy.
The fund Quant says it will have in the works is part of trend in the ETF market focused on catering to investor appetite for both stability and income-producing products at a time of ultra-low interest rates following the market meltdown of 2008.
Blending dividends and low volatility might be the quintessence of trendiness. After all, last year’s two most successful ETF launches were the PowerShares S&P 500 Low Volatility Portfolio (NYSEArca: SPLV) and the iShares High Dividend Equity Index Fund (NYSEArca: HDV). Both funds now have around $1.5 billion in assets.
Such a combo might prove alluring to investors, because as IndexUniverse ETF analyst Carolyn Hill pointed out in a blog, a dividend ETF’s security selection methodology and weighting schemes cause it to have very different payout and overall returns. It remains to be seen what exactly Sage Quant will be rolling out.
The Sage low-volatility dividend fund would track the performance of a yet-to-be-named custom index that would consist of 150 dividend-paying large- and midcap domestic stocks. The methodology screens for future volatility of a security and invests only in those that are expected to pay dividends ahead, the filing said.
The paperwork Sage filed with U.S. regulators requests exemption from sections of the Investment Company Act of 1940 that are necessary for a company to market ETFs. It often takes up to nine months for the first ETF to come to market once a company makes an “exemptive relief” filing.
The company’s filing also requests that exemptions be valid for future funds that would tap into global equities as well as domestic and foreign fixed income.