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Dave Portnoy BUZZ ETF

Fund News Advisors Can Use: The Indexer Loophole Behind Portnoy’s BUZZ Video

In this week’s fund news, how Dave Portnoy used the indexer loophole to promote BUZZ, Driehaus loses its founder, and Morningstar doubles analyst coverage for model portfolios.

Barstool Sports founder Dave Portnoy made a splash last week, promoting a new ETF on Twitter that invests based on stock-specific sentiment expressed over social media. In a recent piece on, Editor-in-Chief Lara Crigger takes a deep dive into why Portnoy was allowed to promote the new VanEck Vectors Social Sentiment ETF (BUZZ) in the way he did. Most ETF issuers, Crigger points out, would likely not get such a video past their compliance departments.

Crigger digs into the semantics of Portnoy’s promotional video, including a couple instances where the word ETF is dubbed over the times he mouths the word index.

“That's the thing about this video,” she writes. “On the surface, it seems clownish. But when you break it down and really examine it closely, piece by piece, all the particular infractions it seems to incur disintegrate before your very eyes.”

Her conclusion is that the video comes under an indexer loophole; indexers aren’t, in fact, regulated by FINRA or the SEC, so they’re not beholden to a compliance department. An index is considered intellectual property, she says: “Indexers are provided wide latitude to say whatever they want regarding their own intellectual property, so long as it isn't blatantly fraudulent or libelous.”

She believes the SEC, however, will crack down on indexers soon to close those loopholes.

Driehaus Loses Its Founder

Richard Driehaus, a philanthropist and founder of Driehaus Capital Management, a boutique investment manager specializing in equity and multiasset strategies, died this week of natural causes. The 78-year-old founded Driehaus in 1982; he leaves behind three daughters and two sisters.

“The competitive fire Richard possessed never waned, nor did his ability to think and see things unconventionally,” said Portfolio Manager Howie Schwab, who has been with Driehaus Capital Management since 2001, in a statement. “His life embodied a sense of ‘carpe diem’ and we will deeply miss his vibrancy and eclectic passion. I was truly fortunate to have had the opportunity to learn directly from an investing legend during my formative years in the investment industry and for that I will be forever grateful.”

Driehaus had a long-standing estate and succession plan in place, to ensure continuity in the firm’s operations and money management activities. The firm remains employee-led.

Driehaus is best known as an early pioneer in momentum investing, which seeks to benefit from the fact that recent price movements in a stock tend to continue in the same direction.

Got FOMO? There’s an ETF for That.

Tuttle Tactical Management has filed to launch a new actively managed exchange traded fund that will invest in “securities that reflect current or emerging trends,” according to Bloomberg.

Called FOMO, an acronym for “fear of missing out,” the ETF will “target everything from stocks across both developed and emerging markets to SPACs, other ETFs, derivatives, volatility products and both leveraged and inverse funds,” Bloomberg reported.

It’s the latest in a string of investment products that aim to capitalize on a seemingly boundless appetite among investors for more speculative assets, much of which is driven by social media platforms.  

Morningstar Doubles Analyst Coverage of Model Portfolios

Morningstar has expanded its forward-looking analyst ratings for managed investments, publishing new ratings on 12 model-portfolio series spanning 76 unique portfolios. The firm now covers 24 series spanning 139 unique portfolios.

The ratings follow Morningstar’s Analyst Rating methodology, which assigns Gold, Silver, Bronze, Neutral or Negative to a portfolio. Previously, Morningstar rated only model portfolios tracked by representative separate accounts.

For example, the firm assigned new Gold ratings to BlackRock’s Target Allocation ETF model portfolio series and Vanguard’s Core model portfolio series.

As of the beginning of March, there were nearly 1,500 model portfolios reported to Morningstar Direct, about 50% more than a year ago.  

J.P. Morgan’s New Emerging Markets Equity ETF

J.P. Morgan Asset Management listed its new JPMorgan Emerging Markets Equity Core ETF (ticker: JEMA) on the CBOE this week, an actively managed fund that draws from its existing emerging markets mutual fund lineup.

The fund seeks to outperform the MSCI Emerging Markets Index (before fees), with a target tracking error of 1.5% to 3%, with a fee of 33 basis points.

“Investors are attuned to the transformative trends shaping the emerging market landscape and demand investment conviction, especially when it comes to weighing the quality and quantity of growth we are seeing across emerging markets,” said Bryon Lake, head of Americas client ETF, J.P. Morgan Asset Management, in a statement. “Combining the efficiencies of the ETF wrapper with the breadth of our global and country-level active capabilities, JPMorgan Emerging Markets Equity Core ETF (JEMA) offers the active touch needed in EM markets to capitalize on stock and sector discrepancies and navigate complex markets going forward.”

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