Alternative Investments: Pacer Acquires Negative Fee ETF from Salt Financial
Pacer ETFs snaps up a negative-fee ETF from Salt Financial.
Pacer ETFs is acquiring the Salt Low truBeta U.S. Market ETF (BATS: LSLT) and its sister fund, the Salt High truBeta U.S. Market ETF (BATS: SLT) from Salt Financial. LSLT is a negative expense ratio ETF. (TheStreet).
Negative expense ratio ETF
Salt Financial launched the Salt Low truBeta U.S. Market ETF (BATS: LSLT) on March 12, 2019, with great fanfare. It was the first-ever fund to offer investors a negative ratio, in this case (-) 0.05%. So investors took home $5 for every $10,000 they invested.
The catch: the negative expense ratio is only available to the first $100 million of incoming assets into the fund. After that milestone, LSLT applies an expense ratio of 0.29 percent per year, or $29 on a $10,000 investment.
“As part of the waiver and contribution arrangement, Salt Financial will waive its entire 0.29% fee and contribute an additional 0.05% from firm resources, netting to an effective 0.05% payment to the fund on the first $100 million in assets for the next 12 months,” said Salt in a statement at the time of the launch.
The ETF posted a YTD return of -9.14% and a 1-year return of -1.83% as on June 12, 2020. It had AUM of $9.03 million and outstanding shares of 349,999.
The ETF offered investors a means to invest in US large and midcap stocks with historically lower volatility than the broader market. It tracked the Salt Low truBeta™ US Market Index.
Pacer ETFs, the acquirer, has not divulged its motives for buying the two ETFs from Salt Financial. However, according to TheStreet, the expense ratios on the two acquired funds will be boosted from 0.29% to 0.60%.
Pacer ETFs are strategy-driven exchange-traded funds that aim to help investors prepare for retirement using rules-based indices to minimize downside risk and screening for quality stocks.
For example, Pacer’s Trendpilot® Series ETFs use a trend following strategy that aims to participate in the market when it is trending up, maintain some exposure during short-term market declines, and exit the market when it is trending down.
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