LAUREL, Md., Jan. 03, 2018 (GLOBE NEWSWIRE) -- Arrow Funds today announced the launch of two exchange traded funds (ETFs) that offer distinct, yet complementary, approaches to international investing. Both the Arrow DWA Country Rotation ETF (NASDAQ:DWCR) and the Arrow Dogs of the World ETF (NYSE:DOGS) look to provide opportunities to capitalize on international market shifts and generate alpha, while employing vastly different methodologies to achieve their objectives.
“DWCR and DOGS represent a sort of yin and yang approach to international equity exposure,” says Joseph Barrato, Arrow Funds CEO and Director of Investment Strategy. “On one hand, in DWCR we have a holistic international solution that provides exposure to top performing countries. On the other hand, with DOGS we offer an opportunistic play for value-minded investors by identifying the worst performing countries.”
The index underlying the Arrow DWA Country Rotation ETF leverages the highly respected technical analysis expertise of Dorsey Wright & Associates to offer a systematic, price momentum strategy that capitalizes on changing international market trends. Rebalanced quarterly, DWCR and its index begin with a universe of 41 countries, then narrow that list down to the 10 strongest performing countries which exhibit the highest relative strength or price performance. Once those countries have been identified, Dorsey Wright’s methodology then identifies 10 companies that demonstrate powerful relative strength characteristics within that country.
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Conversely, the Arrow Dogs of the World ETF employs a contrarian strategy to find value among the worst performing international securities where a mean reversion is expected. Rebalanced annually, DOGS and its underlying index are made up of the five worst-performing countries among a universe of 44 developed, emerging and frontier markets. Holdings represent the top 75% of the market capitalization for each of the five countries selected.
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Arrow launched an international country rotation strategy within the DWA Balanced Fund in 2006. “With the launch of DWCR, we’ve enhanced the international country rotation strategy that we developed with Dorsey Wright 11 years ago. We’ve expanded the country universe and instead of using ETFs, we will be buying individual stocks with the strongest relative strength within those countries,” added Barrato. “At the same time, we are pleased to introduce DOGS, the first packaged mean reversion strategy with an international focus, giving investors the opportunity to have exposure to an investment strategy that taps into deeply undervalued countries. Both strategies have a low correlation to the to the U.S. equity market.”
Investors should consider having a meaningful allocation to international equities in their portfolios because investing internationally helps to diversify a portfolio. The share of the global economy found outside of the U.S. has been steadily rising. While the U.S. economy has seen growth for eight years since the global financial crisis, the international markets have been relatively anemic. Now, the greatest acceleration in growth is happening abroad in regions in earlier stages of their expansion relative to the U.S. Over the last 10 years, the universe of investible countries has on average generated a 0.7% return compared to U.S. market’s 8.7%. The average 10-year return of the U.S. market since 1979 is 10.80% while the international country average is 12.5%.
“The last time the divergence was so wide between the U.S. and the international markets was in 1998,” said Barrato. “While there is still room for growth in the U.S. market, investors should have the ability to generate greater returns from their international exposure in their portfolio over the next 10 years. DWCR and DOGS are unique international trading strategies that have the ability to generate alpha versus a traditional international portfolio, and at the same time can help diversify investors’ U.S. equity positions,” says Barrato.
DWCR and DOGS complement Arrow Fund’s existing lineup of global equity and income-oriented exchange traded funds, including the Arrow Dow Jones Global Yield ETF (NYSE Arca:GYLD), which provides global exposure to traditional and alternative sources of yield; (CBOE:ARCM), a conservative ultra short-term fixed income strategy designed as an alternative to money market and cash positions; Arrow QVM Equity Factor ETF (NYSE Arca:QVM), which provides domestic equity exposure to quality companies and which has delivered above-average yield characteristics; and Arrow DWA Tactical ETF (NASDAQ:DWAT), a global macro strategy that leverages the technical analysis expertise of Dorsey Wright & Associates.
About Arrow: Arrow Funds, including the exchange traded product line ArrowShares, is a company that offers targeted portfolio solutions for ever-changing markets. The company’s vision is to be the leading provider of alternative and tactical investment solutions with a focus on education, research and client service as the cornerstones. To learn more, visit www.ArrowFunds.com.
The Arrow DWA Country Rotation ETF and the Arrow Dogs of the World ETF may not be suitable for all investors. New funds have a limited performance record. 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. The market price may be higher (premium) or lower (discount) than the Net Asset Value (NAV). The funds’ portfolios may underperform their benchmarks and/or other asset classes. The funds’ portfolios may underperform the general equity markets, or other asset classes, with the potential for greater individual security risk, asset class risk, and higher industry concentration risk than more broadly diversified portfolios. The funds may invest in large-cap, mid-cap, and small-cap securities. Investing in small-cap and mid-cap securities may have special risks, including wider variations in earnings and business prospects than larger, more established companies. International investments may involve additional risks, including, but not limited to, currency fluctuation, accounting methods, and geopolitical instability. Emerging markets involve heightened risks related to the same factors as well as increased volatility and potentially lower trading volume. Changes in laws, domestically or abroad, could result in the inability of the funds to operate as described in the prospectuses. Narrowly focused investments may be subject to higher volatility.
Before investing, please read the prospectuses and shareholder reports to learn about the investment strategies and potential risks. Investing involves risks, including the potential for loss of principal. An investor should consider the funds’ investment objectives, charges, expenses and risks carefully before investing. This and other information about the funds is contained in the funds’ prospectuses, which can be obtained by calling 1-877-277-6933.
Content reviewed by an affiliate, Archer Distributors, LLC (member FINRA). AD-010218
A video accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/2ae1aeb0-ef8c-4e62-a438-3bd54c1b58da