New Active Fixed Income ETF filed

Gavekal Asia Pacific Government Bond ETF

Ticker: AGOV

Exchange: TBD

Expense ratio: TBD

Original filing date: January 20, 2021

Effective date: April 05, 2021

Listing Date: TBD

CUSIP: TBD

Active: Yes

Index: Not applicable

Investment Objective: The Gavekal Asia Pacific Government Bond ETF seeks to provide absolute positive returns.

Investment Strategy:

Local currency government bonds of the following countries, with a minimum 3% and maximum 9.5% in each country:

• Australia
• China
• Hong Kong
• India
• Indonesia
• Japan
• Kazakhstan
• Malaysia
• New Zealand
• Pakistan
• Russia
• Singapore
• South Korea
• Sri Lanka
• Taiwan
• Thailand
• the Philippines
• Vietnam

1. Liquidity

2. Yield

3. Duraction < 5 years

Acquire bonds with 6-12 years remaining to maturity

Maintain dollar-weighted average portfolio maturity of at least 5 years

Adviser: Exchange Traded Concepts, LLC

Sub-Adviser: Gavekal Capital Limited

 

Prospectus is here.

MORE ETF HEARSAY

 

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Principal Investment Strategies

The Fund is an actively-managed exchange-traded fund (“ETF”) that seeks to achieve its investment objective by investing in local currency bonds issued by national governments (i.e., sovereign bonds), instrumentalities or political sub-divisions (i.e., quasi-sovereign bonds), and supranational entities such as the World Bank, Asia Development Bank, and Asian Infrastructure Bank (i.e., supranational bonds) in the Asia-Pacific region (“Asia-Pacific government bonds”). Under normal circumstances, the Fund invests at least 80% of its net assets (plus any borrowings for investment purposes) in Asia-Pacific government bonds. The Fund may invest without limit in securities of issuers in emerging markets, including frontier markets. As of the date of this Prospectus, the Asia-Pacific government bonds in which the Fund invests are those from China, India, Indonesia, Singapore, South Korea, Russia, Japan, Malaysia, Taiwan, Thailand, Hong Kong, the Philippines, Pakistan, Vietnam, Sri Lanka, Kazakhstan, Australia, and New Zealand. Gavekal Capital Limited, the Fund’s sub-adviser (the “Sub-Adviser”), expects to allocate at least 3% and no more than 9.5% of the Fund’s total assets to Asia-Pacific government bonds of each country. The list of countries in which the Fund may invest may change from time to time to include other countries in the Asia-Pacific region.

In selecting investments for the Fund, the Sub-Adviser considers (i) a bond’s liquidity, with an emphasis on bonds that can be purchased while having the smallest impact on price, and (ii) a bond’s expected yield, with an emphasis on bonds that have relatively higher yields. The Fund may invest in bonds rated in any category, including bonds that are rated below investment grade. Bonds rated below investment grade are commonly known as “junk bonds.” The Fund will normally maintain an average portfolio duration of at least five years, but may invest in bonds of any duration. Duration is a measure of the sensitivity of a fixed-income investment to a change in interest rates (e.g., for every 1% change in interest rates, a bond’s price will change by 1% for every year of duration). For example, if a bond has a duration of 5 years and interest rates increase by 1%, the value of that bond can be expected to decrease by 5%.

The Fund will generally acquire bonds that have a remaining maturity of between 6 and 12 years at the time of investment and the Sub-Adviser expects to maintain for the Fund a dollar-weighted average portfolio maturity of at least five years. When a bond’s maturity falls below five years, the Sub-Adviser will seek to replace it with a bond with a longer remaining time to maturity. The Fund may also invest in inflation-protected bonds.

The Fund may invest in bonds of Chinese issuers through a Bond Connect Company Limited program (“Bond Connect”), which allows foreign investors, such as the Fund, to invest in such bonds through a Hong Kong account.