Long-time veteran Fidelity portfolio manager and Teton Partners and Gyrfalcon hedge fund founder George Noble is set to have his own exchange-traded fund.
Of course he will.
Ever since the launch of AdvisorShares' first fund in 2009, corner office advisers nationwide have been able to try their hand at taking their local and regional success to the national stage by launching an exchange-traded fund.
The trend of regionally, and even nationally, recognized financial figures launching funds still occurs. Given the 2019 changes to ETF listing regulations that make it easier to launch actively managed ETFs, we have seen more new funds come to market from some surprising sponsors, like former Third Avenue hedge fund CEO David Barse and his launch of the GraniteShares XOUT U.S. Large Cap ETF (XOUT) and now, Mr. Noble.
Mr. Noble has partnered with white label issuer Tidal to file for, and assumedly launching soon, the Nobel Absolute Return ETF (NOPE) . As mentioned, the fund has yet to launch but seeing as there has been an update to the Statement of Additional Information (SAI) on Sept. 27, and a trading circular posted on Sept. 28, 2022, the fund should start trading shortly.
New ETF issuer Noble-Impact Capital is poised to launch the Noble Absolute Return ETF, which sees lead portfolio manager George Noble return to his hedge fund long-short roots. In reviewing the prospectus, the fund is slated to have a 182-basis point expense ratio, meaning that a shareholder with $1,000 invested over a calendar year would expect to pay $18.20 in fees over that period. While this is unusually high for an ETF, those expenses are broken out as 98-basis points for the management fee and an estimated 84-basis points allocated to pay for interest and dividends owed on short sales, which, given the long/short nature of the fund makes sense and I like that they are lumping dividends owed in this figure if only for transparency's sake.
This fund is actively managed and is run as a long/short strategy. What I find interesting is that, unlike other 20/120 or 20/130 strategies, this fund has the flexibility to be positioned anywhere from 100% short the market to 150% long exposure. Positioning and final exposures are determined through a combination of top-down (macro and microeconomic) and bottom-up (company specific) analysis. The strategy is all-cap and global in nature, which includes emerging markets. Eligible securities include equities (common and preferred), ETFs, Depository Receipts (ADRs), Master Limited Partnerships (MLPs), Real Estate Investment Trusts (REITs), Closed-End Funds (CEFs), Investment Grade and "Junk" bonds, and Convertible Bonds. This fund can also borrow to fund positions and use options, warrants, futures, and swaps. Truly a go anywhere, do anything product.
I have often written about how the ETF structure has allowed retail investors to access strategies previously limited to high- and ultra-high net worth, and institutional investors and this fund seems to be a clear example of this phenomenon in action. Here is a veteran global macro hedge fund manager making his strategies available to the investing public for not just less than 2% in fees, but also without the 20% haircut on any portfolio gains. It is a regulatory requirement that issuers remind investors that past performance is no guarantee of future results and there is truth to this. Still, I can't help but wonder how a previously successful portfolio manager will perform in this current environment once this fund is launched. As NOPE begins trading, I'll keep an eye on it and publish a follow-up in a future article.