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XTF enhances country rotation and fixed-income ETF portfolios


XTF Global Asset Management, a New York-based asset manager that builds and manages portfolios of ETFs, has added seven new country-focused funds to its country rotation portfolio and adde

XTF Global Asset Management, a New York-based asset manager that builds and manages portfolios of ETFs, has added seven new country-focused funds to its country rotation portfolio and added several asset classes to its fixed-income ETF portfolio, taking advantage of new ETFs that came to market last year.

The seven new country ETFs, covering Spain, Mexico, Sweden, South Korea, Malaysia, China and Taiwan, increase the exposure of XTF’s Country Rotation Portfolio to emerging markets.

The portfolio now can invest in up to 20 country ETFs. It already offers access to funds tracking the economies of the Netherlands, Germany, France, Switzerland, Italy, the UK, Belgium, Australia, Singapore, Hong Kong, Japan, Canada and South Africa.

‘We’ve been tracking these seven countries’ financial and economic data over the past year and determined that it is now appropriate to add them to our portfolio,’ says Jeff Buetow, XTF’s chief investment officer.

‘We initially limited the portfolio to developed markets to take advantage of the safety of their long track records as well as the sound structural characteristics of the corresponding ETFs.

‘Now that emerging market ETFs have become far more attractive from an investment perspective, we believe it’s the right time to provide emerging-market exposure as part of a well diversified portfolio.’

Since its launch in January 2007, the portfolio has outperformed its benchmark index, the Country Rotation Composite Index, by nearly 200 basis points. Buetow attributes part of its success to XTF’s model-driven investment approach, which actively manages exposure to foreign equity markets.

The model tracks foreign equity market economies, fundamentals, risk and technical factors, generating buy or sell signals for each country. The Country Rotation Portfolio’s performance to date validates this approach, Buetow says.

The portfolio is designed to take advantage of changes in the risk and the appreciation potential of the individual countries it follows. XTF models each country independently, and compares its risk/reward profile to an equivalent investment in intermediate-term US Treasuries.

If the country profile is favourable by comparison with Treasury yields, XTF invests in the country; alternatively, it invests in Treasuries if these are more favourable. Each country in the portfolio is equally weighted at five percent of the total. XTF uses a binary investment strategy, making an ‘all or nothing’ decision on investment in each country.

‘The Country Rotation Portfolio is designed to function as an enhancement to investors’ core portfolio,’ says Tom Scuccimarra, XTF’s head of sales and distribution. ‘By taking a broad, long-term view of international equities, CRP also is a strategy that investors can deploy to mitigate against short-term volatility in their portfolios. By moving into fixed-income ETFs, we can hedge against potential downturns in the foreign equity markets, stabilising investor portfolios further.’

Founded in 2000 with headquarters in New York, XTF builds model-driven ETF portfolios designed to produce consistently strong risk-adjusted returns that outperform their benchmarks, using quantitative investment discipline, in-depth ETF research and the ability to customise its products to the requirements of clients and partners. The firm also provides an ETF rating service to assist advisers and individual investors in choosing ETFs or portfolios of ETFs for investment.

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