John Rekenthaler, Morningstar's vice president of research, isn't a fan of the Dent ETF. Says Johnson, "You would think that a mutual fund with a 1.5% expense ratio is not cheap, but you wouldn't think it was out of the ballpark." The ETF's expense ratio is high for having more than half of its dollars currently in cash. "If we get into a more concerted downturn, which we expect in 2012-14, will give a lot more downside protection than the S&P 500 or any long fund, and at times will even make money." "The greatest debt bubble in history" is weighing on the US economy, Dent warns. Lately his books are gloomier: "The Great Depression Ahead," published in 2009, and, coming this autumn, "The Great Crash Ahead," with Johnson as co-author. The ETF's poor showing echoes that of AIM Dent Demographics Fund, which burst out in June 1999 with a 55% gain by the end of that year, then stumbled and never fully recovered before being merged into another AIM offering in July 2005.ĭent is the author of the 1998 best-seller "The Roaring 2000s," in which he predicted the Dow Jones Industrial Average could hit 35000 by 2008. It has been flat on the year so far, landing at the bottom of Morningstar's world allocation ETF category, while the S&P 500 has returned 6%. Since its inception through June 30, the Dent ETF gained 2.1% annualised return, versus a 15.8% return for the Standard & Poor's 500-stock index, including dividends. But when the risks grow and the returns falter, we move to the sidelines." "Our strategy is momentum-based, which is always something of a following strategy. "You're trying to time the market some," says Johnson, who was once a bond trader. The fund recently had about 60% of the portfolio in a money-market account, 20% split between two utilities-sector ETFs, and the remaining 20% in a small-cap growth stock ETF and a consumer-staples sector ETF. The Dent ETF, meanwhile, trades with a rapid, momentum-based strategy. But baby boomers are nearing or in retirement - when people get rid of stuff - suggesting lower returns for US stocks.ĭemographic trends take years to unfold, and don't always turn out as expected. Put simply, people typically buy more in their 30s and 40s, which Dent says boosts stocks. Investment decisions for the ETF follow "The Dent Method" - billed on Dent's website as "the only documented record of success at forecasting long-term economic trends." The method is tied to consumer spending at various stages of life. Dent is involved in the investment decisions and strategic direction of the portfolio, Johnson says. That's the job of Rodney Johnson, president of HS Dent Investment Management, and an associate of Dent's since 1997. Dent is a co-manager, but he doesn't oversee the ETF portfolio day to day. While some trade individual stocks or bonds, it buys and sells index-tracking ETFs based on market conditions. The fund is among a new breed of actively managed ETFs.