In preparation for this move, Arrow chief Joseph Barrato recently hired ETF expert Joseph Cunningham as director of capital markets.
The Arrow Dow Jones Global Yield ETF (GYLD) will give investors exposure to traditional and alternative yield sources which will follow the Dow Jones Global Composite Yield Index. Zacks notes that the new ETF will compete with the month-old Morningstar Multi-Asset Income Index Fund.
Company Press Release
Arrow Makes Its Exchange Traded Fund Debut With the Launch of the Arrow Dow Jones Global Yield ETF (GYLD)
Based on the Dow Jones Global Composite Yield Index, GYLD Targets a Competitive Yield via Direct Exposure to Traditional and Alternative Assets
OLNEY, MD, May 08, 2012 -- Arrow Investment Advisors, LLC, the advisor to Arrow Funds, today announced the launch of its first exchange traded fund (ETF). The Arrow Dow Jones Global Yield ETF (nyse arca:GYLD) debuts as the only fund to track the Dow Jones Global Composite Yield Index, a newly launched benchmark that provides diversified exposure to traditional and alternative sources of income across multiple asset classes. The benchmark has shown a competitive yield range of approximately 7% to 9% over the past year, subject to market fluctuation.
"The prevailing low interest rate environment has made it extremely challenging for income-oriented investors to generate substantial yield via traditional means," says Joseph Barrato, CEO, Arrow Investment Advisors. "The Arrow Dow Jones Global Yield ETF provides an exchange traded solution designed to boost the yield play in an investment portfolio."
Compared to other yield strategies, which tend to be limited in scope, Arrow's new ETF takes a global approach to finding the most competitive sources of yield across various assets, including equities, fixed income and alternative investments.
"For investors seeking a higher-yielding core holding with similar historical risk to the S&P 500, we believe the Arrow Dow Jones Global Yield ETF may be an appropriate substitution for high yield or moderately aggressive equity allocations," says Barrato. "GYLD is designed to tactically target yield, which may also make it suitable for investors seeking an adaptive element to their portfolio."
At an expense ratio of 0.75 percent, the Arrow Dow Jones Global Yield ETF seeks investment results that correspond generally to the price and yield performance of the Dow Jones Global Composite Yield Index. To reduce concentration risk, the index is equally weighted among the following sub-indexes: global equity, global real estate, global alternatives (including MLPs), global corporate debt and global sovereign debt. Additionally, each of the sub-indexes is equally weighted among 30 holdings, totaling 150 securities. To ensure optimum investability, the index methodology follows a strict screening process with quarterly rebalancing.
"We developed the Dow Jones Global Composite Yield Index in response to the strong demand for yield in the current market environment," says Michael A. Petronella, president of Dow Jones Indexes. "This new index is an innovative and diversified measure of yield across multiple asset classes that offer exposure to traditional and alternative sources of income."
In addition to providing a new income alternative for investors, GYLD marks the debut of Arrow Investment Advisors' new exchange traded product line, which is branded ArrowShares. Since its inception in 2006, Arrow has earned a reputation for bringing innovative alternative investments and tactical portfolio solutions to the marketplace. ArrowShares serves as a complement to the firm's existing Arrow Funds lineup -- which has garnered more than $700 million in assets across five mutual funds providing exposure to commodities, managed futures, absolute return- and relative strength momentum-based strategies.
About Arrow Investment Advisors
Arrow Investment Advisors, LLC, the advisor to ArrowShares, is an investment management firm dedicated to providing investment solutions, education and research to financial intermediaries. Arrow identifies and develops investment products that seek to enhance returns and mitigate risk. The firm is committed to delivering superior performance while providing the highest level of customer service. To learn more, visit www.ArrowShares.com .
Before investing, please read the prospectus and shareholder reports to learn about the investment strategy and potential risks. Investing involves risks, including the potential for loss of principal. An investor should consider the fund's investment objective, charges, expenses and risks carefully before investing. This and other information about the fund is contained in the fund's prospectus, which can be obtained by calling 1-877-277-6933. Distributed by Northern Lights Distributors, LLC (member FINRA). Northern Lights Distributors, LLC is an unaffiliated entity from Arrow Investment Advisors, LLC.
The Arrow Dow Jones Global Yield ETF may not be suitable for all investors. The fund is new and has a limited performance record. The fund may not replicate the exact performance of the benchmark because of fees, expenses, trading costs and portfolio tracking error. Exchange traded products are bought and sold at market price, not NAV, and are not individually redeemed from the fund. Buying and selling shares generally results in brokerage commissions, which will reduce returns. Fixed income securities may be subject to risks associated with interest rate fluctuations. International investments may involve additional risks, including, but not limited to, currency fluctuation, differences in generally accepted accounting principles, economic differences and political instability. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Changes in laws, domestically or abroad, could result in the inability of the fund to operate as described in the prospectus. Narrowly focused investments may be subject to higher volatility. High-yielding stocks and non-investment grade bonds are often higher-risk investments, which may be subject to greater volatility due to such factors as corporate developments, interest rate sensitivity, negative perceptions whether factual or not, and adverse economic conditions. Master Limited Partnerships (MLPs) and Royalty Investment Trusts (RITs) have specific risks, including, among others, limited voting rights, energy demand, limited call rights of the general partner and changes in tax laws. In order to qualify for the tax treatment of a regulated investment company (RIC), the fund's exposure to MLPs cannot exceed 25%, or the fund may be subject to corporate tax status, which would reduce the overall performance. Investments in securities of real estate companies involve risks, including, among others, adverse changes in national, state or local real estate conditions domestically or abroad; obsolescence of properties; changes in the availability, cost and terms of mortgage funds; and the impact of changes in environmental or tax laws.
Dow Jones Global Composite Yield Index(SM) is a product of Dow Jones Indexes, the marketing name and licensed trademark of CME Group Index Services LLC ("CME Indexes"), and has been licensed for use. "Dow Jones," Dow Jones Global Composite Yield Index and "Dow Jones Indexes" are service marks of Dow Jones Trademark Holdings, LLC ("Dow Jones"), have been licensed to CME Indexes and have been sublicensed for use for certain purposes by ArrowShares, the exchange traded product line of Arrow Funds. Funds based on the Dow Jones Indexes are not sponsored, endorsed, issued, sold or promoted by Dow Jones, CME Indexes or their respective affiliates and Dow Jones, CME Indexes and their respective affiliates make no representation regarding the advisability of investing in such product(s).