ARCM ETF: Alternative Yield For Conservative Portfolios

Mike Kastner, Principal at Haylard Asset Management spoke with Julie Cooling, Founder and CEO, RIA Channel about the strategy behind the ARCM (Arrow Reserve Capital Management) Fund.  Halyard, a sub-advisor for ARCM, is focused on actively managed fixed income securities and maintaining assets in all interest rate environments.

Arrow Funds and Halyard partnered in 2017 to create an ETF that delivered a better return than a bank deposit, but with a better risk profile than a money market fund.  The ultra-short fixed income ETF (no maturity longer than 3 years), invests in corporate and municipal bonds, while traditional money market funds have a broader investment spectrum and utilize floating valuation. Kastner explained that as traditional money market funds get riskier, ARCM serves as a conservative cash-type alternative. With the potential for “3-4 interest rate hikes” in the coming years, Kastner believes ARCM will perform strongly.

When asked where ARCM would best fit in an advisor portfolio, Kastner recommended using it in lieu of keeping money in the bank or as “Dry Powder” meaning a “buffer for when the market comes under stress or to something to flow out when the market is under stable footing.”

Founded in 2006, Arrow Funds started with their offering of mutual funds and eventually became the first to offer ETF’s in a mutual fund structure. Their newest ETF, ARCM, was first launched in March of 2017 and has seen continued growth in assets. Since the filming of this video, assets have grown from $30 million to over $75 million.