If You Like Demographics, You’ll Love The DENT ETF
Harry S. Dent Jr. is back, and this time he’s got an ETF. The Dent Tactical ETF (DENT) started trading today (September 16, 2009). It is being offered by a new ETF sponsor called AdvisorShares. Unlike most other fund sponsors, AdvisorShares chose to not include their name as part of the ETF’s name. DENT is an actively managed ETF of ETFs that claims to have five key attributes: proprietary demographic analysis, tactical investment approach, risk mitigation process, management expertise, and active management.
Other attributes include a management fee of 0.95% and a gross expense ratio of 1.56%, which assumes expenses for the “acquired funds” (underlying ETFs) are just 0.17%. The fund has “generously” offered to cap the fund’s net expenses at 1.50% for the next 50 weeks. However, according to the prospectus, this cap excludes interest, taxes, brokerage commissions, acquired fund fees and expenses, and extraordinary expenses. It appears to me that this so-called cap is actually a potential elevation of fees. Since the 1.56% gross expense ratio includes 0.17% for “acquired fund fees,” the advisor is essentially capping a 1.39% expense at 1.50%.
“This should create a peak Dow of 21,500” in 2006. “…the more aggressive ratio trajectory is more likely to be the trend. That trajectory would allow for a Dow as high as 35,000” in 2008.
– Harry S. Dent Jr. (1998), The Roaring 2000s
The Dent Tactical ETF website has links to the prospectus, fact sheet, and an educational piece on demographics. Unfortunately, these are only downloadable from the site so I cannot provide direct links here.
As part of its active management, the fund’s website will provide complete holdings every day after the market close. It appears that the fund launched with 11 holdings equally weighted at 8.9% each. First day market action caused iShares MSCI South Africa (EZA) to become its largest holding at 9.17% and Vanguard Europe Pacific ETF (VEA) to become its smallest at 9.01%. The current mix is about 44% domestic, 43% developed international, and 11% emerging markets.
This product has more than its fair share of hurdles to overcome if it is to be economically viable. Not the least of which is that ETF investors have shunned actively managed ETFs. I will not be surprised to see this fund in my April 2010 ETF Deathwatch, after its six-month grace period expires.
Disclosure: no positions