Vaughan Nelson Select ETF Tapped by CFRA as a Fund in Focus
CFRA, one of the world’s largest independent research firms, recognizes the Natixis Vaughan Nelson Select ETF (VNSE) as one of their Funds in Focus, with a 5-star rating, the highest ranking based on CFRA’s proprietary quantitative and holistic assessment. Highlights of the attached article:
This ETF is different from traditional ETFs. Traditional ETFs tell the public what assets they hold each day. This ETF will not. This may create additional risks for your investment. For example: You may have to pay more money to trade these ETFs’ shares. This ETF will provide less information to traders, who tend to charge more for trades when they have less information. The price you pay to buy ETF shares on an exchange may not match the value of the ETF’s portfolio. The same is true when you sell shares. These price differences may be greater for this ETF compared to other ETFs because it provides less information to traders. These additional risks may be even greater in bad or uncertain market conditions. This ETF will publish on its website each day a Proxy Portfolio (“Proxy Portfolio”) designed to help trading in shares of the ETF. While the Proxy Portfolio includes some of these ETFs’ holdings, it is not the ETFs’ Actual Portfolio (“Actual Portfolio”). The differences between this ETF and other ETFs may also have advantages. By keeping certain information about the ETF secret, this ETF may face less risk that other traders can predict or copy its investment strategy. This may improve the ETFs’ performance. If other traders are able to copy or predict the ETFs’ investment strategy, however, this may hurt the ETFs’ performance. For additional information regarding the unique attributes and risks of this ETF, see the discussion on the Proxy Portfolio and the “Proxy Portfolio Structure Risk,” “Authorized Participant Concentration Risk,” “Predatory Trading Practices Risk,” “Premium/Discount Risk,” and “Trading Issues Risk” within the prospectus.
Average Annualized Total Returns (%)1 for the Natixis Vaughan Nelson Select ETF (VNSE) as of 3/31/2021:
3 Months
YTD
1 Year
3 Years
5 Years
Gross expense ratio 1.94%. Net expense ratio 0.80%. As of the most recent prospectus, the investment advisor has contractually agreed to waive fees and/or reimburse expenses (with certain exceptions) once the expense cap of the fund has been exceeded. This arrangement is set to expire on 4/30/24. When an expense cap has not been exceeded, the gross and net expense ratios may be the same. See prospectus for more details.
Risks:
ETF General Risk: Exchange-Traded Funds (ETFs) trade like stocks, are subject to investment risk, and will fluctuate in market value. Unlike mutual funds, ETF shares are not individually redeemable directly with the Fund, and are bought and sold on the secondary market at market price, which may be higher or lower than the ETF's net asset value (NAV). Transactions in shares of ETFs will result in brokerage commissions, which will reduce returns. Active ETF: Unlike typical exchange-traded funds, there are no indexes that the Fund attempts to track or replicate. Thus, the ability of the Fund to achieve its objectives will depend on the effectiveness of the portfolio manager. There is no assurance that the investment process will consistently lead to successful investing. Equity Securities Risk: Equity securities are volatile and can decline significantly in response to broad market and economic conditions. Small and Mid-Cap Stocks Risk: Investments in small and midsize companies can be more volatile than those of larger companies. Value Investing Risk: Value investing carries the risk that a security can continue to be undervalued by the market for long periods of time. Predatory Trading Practices Risk: Although the Fund seeks to benefit from keeping its portfolio holdings information secret, market participants may attempt to use the Proxy Portfolio and related Proxy Portfolio Disclosures to identify the Fund's holdings and trading strategy. If successful, this could result in such market participants engaging in predatory trading practices that could harm the Fund and its shareholders. Proxy Portfolio Structure Risk: Unlike traditional ETFs that provide daily disclosure of their portfolio holdings, the Fund does not disclose the daily holdings of the Actual Portfolio. Instead, the Fund discloses a Proxy Portfolio that is designed to reflect the economic exposure and risk characteristics of the Fund's Actual Portfolio on any given trading day. Although the Proxy Portfolio and Proxy Portfolio Disclosures are intended to provide Authorized Participants and other market participants with enough information to allow them to engage in effective arbitrage transactions that will keep the market price of the Fund's shares trading at or close to the underlying NAV per share of the Fund, while at the same time enabling them to establish cost-effective hedging strategies to reduce risk, there is a risk that market prices will vary significantly from the underlying NAV of the Fund. Authorized Participant Concentration Risk: Only an authorized participant ("Authorized Participant") may engage in creation or redemption transactions directly with the Fund. The Fund has a limited number of institutions that act as Authorized Participants, none of which are or will be obligated to engage in creation or redemption transactions. To the extent that these institutions exit the business or are unable to proceed with creation and/or redemption orders with respect to the Fund and no other Authorized Participant is able to step forward to create or redeem Creation Units, Fund shares may trade at a discount to NAV and possibly face trading halts and/or delisting. The Fund's novel structure may affect the number of entities willing to act as Authorized Participants, and this risk may be exacerbated during times of market stress. Trading Issues Risk: Trading in Fund shares on the NYSE Arca may be halted in certain circumstances. If 10% or more of the Fund's Actual Portfolio does not have readily available market quotations, the Fund will promptly request that the NYSE Arca halt trading in the Fund's shares. Such trading halts may have a greater impact on the Fund compared to other ETFs due to its lack of transparency. Premium/Discount Risk: The market value of the Fund's shares will fluctuate, in some cases materially, in response to changes in the Fund's NAV, the intraday value of the Fund's holdings, and the relative supply and demand for the Fund's shares on the exchange. There is a risk (which may increase during periods of market disruption or volatility) that market prices for Fund shares will vary significantly from the Fund's NAV. This risk may be greater for the Fund than for traditional ETFs that disclose their full portfolio holdings on a daily basis because the publication of the Proxy Portfolio does not provide the same level of transparency as the publication of the full portfolio by a fully transparent active ETF. Fund is new with a limited operating history.
Definitions:
The S&P 500® Index is a widely recognized measure of US stock market performance. It is an unmanaged index of 500 common stocks chosen for market size, liquidity, and industry group representation, among other factors. It also measures the performance of the large-cap segment of the US equities market. You may not invest directly in an index. You may not invest directly in an index. Basis points, otherwise known as “bps," are a unit of measure often used to describe the percentage change in the value of an investment. One basis point is the equivalent to 0.01% or 0.0001 in decimal form. Beta measures the volatility of a security or a portfolio in comparison to the market as a whole. Discount to asset value is a pricing situation that occurs when the market trading price for a security is lower than its net asset value (“NAV”). The NAV is the value of the security’s total assets at market close, minus the security’s liabilities, divided by the total number of shares outstanding in the security. The dividend yield, expressed as a percentage, is a financial ratio (dividend/price) that shows how much a security pays out in dividends each year relative to its stock price.
CFRA Rating Methodology:
The ETF overall rating provides quantitative and holistic assessment of the relative costs, rewards and risks of a given ETF compared with all ETFs in its Category. CFRA’s approach incorporates a combination of holdings-analysis, total cost of ownership and certain relative performance metrics focused on consistency and limiting downside during times of market stress. ETFs receive ratings ranging from 5 STARS (highest) to 1 STAR (lowest), using machine-learning techniques, in an effort to identify which funds have the highest and lowest probability of outperformance of a broad category over the next nine months. For equity funds, the approach blends CFRA’s proprietary forensic and fundamental approaches, including quantitative earnings quality scores and STARS (Stock Appreciation Ranking System), which offer a proven approach to equities analysis. Separately, CFRA rates fixed income ETFs utilizing the portfolio’s yield and duration attributes. Additional key cost factors and performance metrics further support the ratings for all ETFs. The Overall Ratings breakdown is as follows:
All of the views expressed in this research report accurately reflect CFRA’s quantitative research models regarding any and all of the subject securities or issuers. No part of CFRA’s compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this research report. An ETF may receive an overall ETF rating even when the ETF does not have a rating for each of the input factors.
Top 10 Holdings for VNSE (as of 3/31/2021 and subject to change)
This information is dated and cannot be relied upon as current thereafter. This portfolio is actively managed and holdings are subject to change. There is no guarantee the fund continues to invest in the securities referenced, and the holdings identified do not represent all of the securities purchased, sold or recommended. Reference to specific securities or holdings should not be considered recommendations for action by investors.
This document may contain references to third party copyrights, indexes, and trademarks, each of which is the property of its respective owner. Such owner is not affiliated with Natixis Investment Managers or any of its related or affiliated companies (collectively “Natixis”) and does not sponsor, endorse or participate in the provision of any Natixis services, funds or other financial products.
The index information contained herein is derived from third parties and is provided on an “as is” basis. The user of this information assumes the entire risk of use of this information. Each of the third party entities involved in compiling, computing or creating index information disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to such information.
This material is provided for informational purposes only and should not be construed as investment advice. The views and opinions expressed are as of February 16, 2022 and may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted, and actual results may vary.
Copyright © 2022. Reprinted with permission. This material should not be considered a solicitation to buy or an offer to sell any product or service to any person in any jurisdiction where such activity would be unlawful.
Before investing, consider the Fund’s investment objectives, risks, charges, and expenses. Please visit im.natixis.com or call us at 800-225-5478 for a prospectus or a summary prospectus containing this and other information. Read it carefully.
ALPS Distributors, Inc. is the distributor for the Natixis Vaughan Nelson Select ETF (VNSE). Natixis Distribution, LLC is a marketing agent. ALPS Distributors, Inc. is not affiliated with Natixis Distribution, LLC. Natixis Distribution, LLC is the distributor for the Vaughan Nelson Select Fund (VNSYX).
Natixis Distribution, LLC is a limited purpose broker-dealer and the distributor of various registered investment companies for which advisory services are provided by member companies of Natixis Investment Managers. Natixis Investment Managers and Vaughan Nelson are affiliated.
Natixis Distribution, LLC is located at 888 Boylston Street, Suite 800, Boston, MA 02199-8197. • 800-225-5478 • im.natixis.com • Member FINRA|SIPC.
- Along with VNSE’s performance results, CFRA believes what’s inside an ETF is just as important as its record. As such, their evaluation underscores the Fund’s strong combination of forward-looking reward and potential risk mitigation attributes.
- In efforts to provide compelling investor solutions, many asset managers have launched actively managed ETFs in the past three years – with continued growth thanks to asset gathering success and conversion of mutual funds into ETFs. CFRA presents VNSE as one such equity ETF that warrants consideration by investors preferring an active, low turnover approach.
- The Vaughan Nelson team brings its 10-year tenure managing assets in a strategy similar to that applied in VNSE. This long-standing bottom-up, concentrated approach (fewer than 30 stocks) seeks to deliver predictable returns over a 3-year period rather than simply focusing on quarterly results.
- CFRA’s analysis applauds the fund’s top 10 holdings for high quality attributes and attractive valuation. Vaughan Nelson’s approach aims to own companies whose management believes future capital redeployment is not reflected in current valuation, or where the stock is priced at a discount to asset value with an identifiable catalyst to close the valuation gap.
- VNSE is managed by Vaughan Nelson’s Chris Wallis and Scott Weber. Read more about Weber’s insights on a few of the Fund’s recent holdings.
Average Annualized Total Returns (%)1 for the Natixis Vaughan Nelson Select ETF (VNSE) as of 3/31/2021:
3 Months
YTD
1 Year
3 Years
5 Years
Since Inception (9/16/20)
ETF (NAV)
-2.69
-2.69
24.83
-
-
30.15
ETF (Market Price)
-2.68
-2.68
24.76
-
-
30.22
S&P 500® Index
-4.60
-4.60
15.65
-
-
22.55
1 Performance for periods less than one year is cumulative, not annualized. Returns reflect changes in share price and reinvestment of dividends and capital gains, if any.
Performance data shown represents past performance and is no guarantee of, and not necessarily indicative of, future results. Total return and value will vary, and you may have a gain or loss when shares are sold. Current performance may be lower or higher than quoted. For most recent month-end performance, visit im.natixis.com. An exchange-traded fund’s market price is the price at which shares in the ETF can be bought or sold on the exchanges during trading hours, while the net asset value (NAV) represents the value of each share’s portion of the fund’s underlying assets and cash at the end of the trading day. ETFs calculate the NAV at 4 p.m. ET, after the markets close.Gross expense ratio 1.94%. Net expense ratio 0.80%. As of the most recent prospectus, the investment advisor has contractually agreed to waive fees and/or reimburse expenses (with certain exceptions) once the expense cap of the fund has been exceeded. This arrangement is set to expire on 4/30/24. When an expense cap has not been exceeded, the gross and net expense ratios may be the same. See prospectus for more details.
Risks:
ETF General Risk: Exchange-Traded Funds (ETFs) trade like stocks, are subject to investment risk, and will fluctuate in market value. Unlike mutual funds, ETF shares are not individually redeemable directly with the Fund, and are bought and sold on the secondary market at market price, which may be higher or lower than the ETF's net asset value (NAV). Transactions in shares of ETFs will result in brokerage commissions, which will reduce returns. Active ETF: Unlike typical exchange-traded funds, there are no indexes that the Fund attempts to track or replicate. Thus, the ability of the Fund to achieve its objectives will depend on the effectiveness of the portfolio manager. There is no assurance that the investment process will consistently lead to successful investing. Equity Securities Risk: Equity securities are volatile and can decline significantly in response to broad market and economic conditions. Small and Mid-Cap Stocks Risk: Investments in small and midsize companies can be more volatile than those of larger companies. Value Investing Risk: Value investing carries the risk that a security can continue to be undervalued by the market for long periods of time. Predatory Trading Practices Risk: Although the Fund seeks to benefit from keeping its portfolio holdings information secret, market participants may attempt to use the Proxy Portfolio and related Proxy Portfolio Disclosures to identify the Fund's holdings and trading strategy. If successful, this could result in such market participants engaging in predatory trading practices that could harm the Fund and its shareholders. Proxy Portfolio Structure Risk: Unlike traditional ETFs that provide daily disclosure of their portfolio holdings, the Fund does not disclose the daily holdings of the Actual Portfolio. Instead, the Fund discloses a Proxy Portfolio that is designed to reflect the economic exposure and risk characteristics of the Fund's Actual Portfolio on any given trading day. Although the Proxy Portfolio and Proxy Portfolio Disclosures are intended to provide Authorized Participants and other market participants with enough information to allow them to engage in effective arbitrage transactions that will keep the market price of the Fund's shares trading at or close to the underlying NAV per share of the Fund, while at the same time enabling them to establish cost-effective hedging strategies to reduce risk, there is a risk that market prices will vary significantly from the underlying NAV of the Fund. Authorized Participant Concentration Risk: Only an authorized participant ("Authorized Participant") may engage in creation or redemption transactions directly with the Fund. The Fund has a limited number of institutions that act as Authorized Participants, none of which are or will be obligated to engage in creation or redemption transactions. To the extent that these institutions exit the business or are unable to proceed with creation and/or redemption orders with respect to the Fund and no other Authorized Participant is able to step forward to create or redeem Creation Units, Fund shares may trade at a discount to NAV and possibly face trading halts and/or delisting. The Fund's novel structure may affect the number of entities willing to act as Authorized Participants, and this risk may be exacerbated during times of market stress. Trading Issues Risk: Trading in Fund shares on the NYSE Arca may be halted in certain circumstances. If 10% or more of the Fund's Actual Portfolio does not have readily available market quotations, the Fund will promptly request that the NYSE Arca halt trading in the Fund's shares. Such trading halts may have a greater impact on the Fund compared to other ETFs due to its lack of transparency. Premium/Discount Risk: The market value of the Fund's shares will fluctuate, in some cases materially, in response to changes in the Fund's NAV, the intraday value of the Fund's holdings, and the relative supply and demand for the Fund's shares on the exchange. There is a risk (which may increase during periods of market disruption or volatility) that market prices for Fund shares will vary significantly from the Fund's NAV. This risk may be greater for the Fund than for traditional ETFs that disclose their full portfolio holdings on a daily basis because the publication of the Proxy Portfolio does not provide the same level of transparency as the publication of the full portfolio by a fully transparent active ETF. Fund is new with a limited operating history.
Definitions:
The S&P 500® Index is a widely recognized measure of US stock market performance. It is an unmanaged index of 500 common stocks chosen for market size, liquidity, and industry group representation, among other factors. It also measures the performance of the large-cap segment of the US equities market. You may not invest directly in an index. You may not invest directly in an index. Basis points, otherwise known as “bps," are a unit of measure often used to describe the percentage change in the value of an investment. One basis point is the equivalent to 0.01% or 0.0001 in decimal form. Beta measures the volatility of a security or a portfolio in comparison to the market as a whole. Discount to asset value is a pricing situation that occurs when the market trading price for a security is lower than its net asset value (“NAV”). The NAV is the value of the security’s total assets at market close, minus the security’s liabilities, divided by the total number of shares outstanding in the security. The dividend yield, expressed as a percentage, is a financial ratio (dividend/price) that shows how much a security pays out in dividends each year relative to its stock price.
CFRA Rating Methodology:
The ETF overall rating provides quantitative and holistic assessment of the relative costs, rewards and risks of a given ETF compared with all ETFs in its Category. CFRA’s approach incorporates a combination of holdings-analysis, total cost of ownership and certain relative performance metrics focused on consistency and limiting downside during times of market stress. ETFs receive ratings ranging from 5 STARS (highest) to 1 STAR (lowest), using machine-learning techniques, in an effort to identify which funds have the highest and lowest probability of outperformance of a broad category over the next nine months. For equity funds, the approach blends CFRA’s proprietary forensic and fundamental approaches, including quantitative earnings quality scores and STARS (Stock Appreciation Ranking System), which offer a proven approach to equities analysis. Separately, CFRA rates fixed income ETFs utilizing the portfolio’s yield and duration attributes. Additional key cost factors and performance metrics further support the ratings for all ETFs. The Overall Ratings breakdown is as follows:
| 5-STARS |
Total return is expected to outperform the total return of a relevant benchmark over the coming 9 months. |
| 4-STARS |
Total return is expected to slightly outperform the total return of a relevant benchmark over the coming 9 months. |
| 3-STARS |
Total return is expected to closely approximate the total return of a relevant benchmark over the coming 9 months. |
| 2-STARS |
Total return is expected to slightly underperform the total return of a relevant benchmark over the coming 9 months. |
| 1-STARS |
Total return is expected to underperform the total return of a relevant benchmark over the coming 9 months. |
Top 10 Holdings for VNSE (as of 3/31/2021 and subject to change)
| Security Description | % of Portfolio |
| Berkshire Hathaway, Inc. Class B | 5.51 |
| Microsoft Corp. | 5.19 |
| Union Pacific Corp. | 5.14 |
| Danaher Corp. | 5.05 |
| Vertex Pharmaceuticals, Inc. | 4.91 |
| Motorola Solutions, Inc. | 4.74 |
| NextEra Energy, Inc. | 4.62 |
| Johnson & Johnson | 4.59 |
| Wheaton Precious Metals Corp. | 4.51 |
| Intercontinental Exchange, Inc. | 4.49 |
This document may contain references to third party copyrights, indexes, and trademarks, each of which is the property of its respective owner. Such owner is not affiliated with Natixis Investment Managers or any of its related or affiliated companies (collectively “Natixis”) and does not sponsor, endorse or participate in the provision of any Natixis services, funds or other financial products.
The index information contained herein is derived from third parties and is provided on an “as is” basis. The user of this information assumes the entire risk of use of this information. Each of the third party entities involved in compiling, computing or creating index information disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to such information.
This material is provided for informational purposes only and should not be construed as investment advice. The views and opinions expressed are as of February 16, 2022 and may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted, and actual results may vary.
Copyright © 2022. Reprinted with permission. This material should not be considered a solicitation to buy or an offer to sell any product or service to any person in any jurisdiction where such activity would be unlawful.
Before investing, consider the Fund’s investment objectives, risks, charges, and expenses. Please visit im.natixis.com or call us at 800-225-5478 for a prospectus or a summary prospectus containing this and other information. Read it carefully.
ALPS Distributors, Inc. is the distributor for the Natixis Vaughan Nelson Select ETF (VNSE). Natixis Distribution, LLC is a marketing agent. ALPS Distributors, Inc. is not affiliated with Natixis Distribution, LLC. Natixis Distribution, LLC is the distributor for the Vaughan Nelson Select Fund (VNSYX).
Natixis Distribution, LLC is a limited purpose broker-dealer and the distributor of various registered investment companies for which advisory services are provided by member companies of Natixis Investment Managers. Natixis Investment Managers and Vaughan Nelson are affiliated.
Natixis Distribution, LLC is located at 888 Boylston Street, Suite 800, Boston, MA 02199-8197. • 800-225-5478 • im.natixis.com • Member FINRA|SIPC.
4460864.2.1
ALPS ID NTS0000195
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