New ETF Shifts between Stocks and Bonds


It’s stock-backed. No wait, it’s bond-backed.

Hold a second, it can be backed by both.


WBI Shares debuted a brand new ETF that trades on the New York Stock Exchange that can shift its underlying assets between equities and fixed-income securities. Introducing the WBI BullBear Trend Switch US 3000 Total Return ETF (WBIT) that employs both an equity model and a bond model to determine its holdings.

WBIT’s investment objective, according to the prospectus, is to seek current income with the potential for long-term capital appreciation while also seeking to protect principal during unfavorable market conditions.

WBI has been in the business of using trend models to optimize risk and return for domestic stock and fixed income exposures for nearly three decades. These models are fused into the company’s management system to provide bull or bear trend indications that “tighten or loosen” the firm’s risk management system.

The new ETF, which comes with a gross expense ratio of 0.68%, employs both an equity model and a bond model based on the markets.

“WBIT aims to optimize risk and return by looking first to the equity model when conditions are deemed favorable for equity,” WBI Shares wrote in the ETF’s fact sheet. “If the model indicates conditions for risk are high in equities, we then look to the bond model to determine preference for bond type and duration or cash.”

The equity model creates an indication whether risk is on or off by looking at both market trends and macroeconomic factors.

According to the fund’s prospectus, “The purpose of the equity model is to assess conditions likely to affect the relative performance of the All Cap equity market with respect to its sensitivity to the then current level of market risk and respond to only those investment environments that are likely to produce significant changes in market performance.”

The bond model looks at factors including interest rates, price momentum, yield, currency, and equity earnings to determine the optimal duration and credit quality for fixed income holdings. Based on these factors, the model determines the optimal duration and credit opportunities, including US Treasuries, corporate, or high yield.

“The purpose of the bond model is to assess conditions likely to affect the relative performance of selected segments of the fixed income market with respect to their sensitivity to credit quality and duration,” the prospectus explained. The fund will invest in debt securities including US treasuries, US investment grade corporate bonds, junk bonds, and ETFs and ETNs with exposure to the debt securities described.”

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