Dent Tactical ETF Is Dented

NEW YORK (TheStreet) -- The Dent Tactical ETF(DENT Quote) from AdvisorShares may very well be the dumbest ETF of 2009. I hesitate to speak so soon, as the ETF industry rapidly expands and three months remain in the calendar year, but this new fund is truly one of the worst ideas I have seen in quite some time.

Launched on Sept. 16, DENT is an actively managed ETF with "five key attributes": proprietary demographic analysis, tactical investment approach, risk mitigation process, management expertise and active management. Forget cap-weighted, revenue-weighted or dividend-weighted, DENT takes methodology complexity to a whole new level.

Oh, by the way, the total expense ratio is 1.56% and the management fee is 0.95%.

The ETF industry is booming, and with good reason. Investors have sought out ETFs because of their transparency, low expense ratios, sector access and hedge-ability. DENT is a high-cost ETF whose assets are adjusted at the portfolio at the manager's whim and whose daily holdings are published only after the trading day is complete.

ETFs have traditionally helped investors stay on the highway or gain access to specific sectors at a low cost. Funds like the SPDR S&P 500 ETF(SPY Quote) and PowerShares QQQ(QQQQ Quote) help investors passively track benchmarks without the transactional costs of buying and selling the underlying components. Market Vectors Steel(SLX Quote) and iShares Turkey(TUR Quote) offer sector and international exposure.

Actively managed ETFs like DENT have failed to take hold in an industry known for low-cost passive strategies. The first actively managed ETF, the Bear Stearns Current Yield Fund(YYY Quote) was shuttered soon after its debut when JPMorgan Chase(JPM Quote) stepped in and took over the reins. After the acquisition, YYY liquidated its holdings.