Arrow Reserve Capital Management ETF

Arrow Reserve Capital Management ETF (ARCM) is an actively managed ultra-short bond fund. It holds US Treasury bills and short-term investment-grade corporate bonds, and it aims to preserve capital while earning more income than a money market fund. Its 0.50% expense ratio is well above the 0.20% charged by the closest comparable fund. It also trailed its six-month Treasury bill benchmark over one and five years through December 31, 2025.

• Over the year to Oct 27, 2026, ARCM returned +3.3%.
• Its 5-year annualized return was +3.4%.
• In the 2020 COVID crash it fell 1% and regained its old high 0.8 months after the low.
• Its worst full calendar year was 2021 (-0.3%); its best was 2024 (+5.2%).
• The deepest fall in its price history was 4.1% (Nov 3, 2017 to Nov 16, 2017), recovered by Oct 25, 2019.

As of Jul 31, 2026, the fund held 100 securities; the ten largest made up 37.53% of assets.

The bonds mature in 0.4 years on average (weighted by size), with an average coupon of 2.66%.

• Over the three months to Jul 31, 2026, investors added a net $0.00 (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +0.30%, +0.24%, +0.29%.

ARCM does not track an index. Arrow Funds runs the fund, and its sub-advisor, Halyard Asset Management, picks the bonds. It buys US dollar bonds from US issuers, including mortgage- and asset-backed securities. They must be rated Baa or higher by Moody's, which is the lowest tier of investment grade, or carry an equal rating from S&P or Fitch. Unrated bonds the sub-advisor judges to be of similar quality also qualify. The manager looks for bonds that pay more than money market funds for a given level of credit risk and maturity.

The fund keeps maturities short. Its dollar-weighted average maturity is normally not expected to exceed three years. Its duration, a measure of how much prices react to interest-rate changes, normally stays under 18 months. The manager shifts it based on its forecast for rates. As of July 31, 2026, the fund had 100 holdings with an average maturity of 0.4 years: 37% Treasuries and 62% corporate bonds. The largest holding was a Treasury bill maturing August 20, 2026, at 11.3%. Bonds from Allstate, Amgen, Duke Energy and Becton Dickinson were about 2% each. Portfolio turnover was 80%.

The fund may use interest-rate futures and forwards to gain exposure or hedge rate risk, though it held none as of July 31, 2026. It may keep a bond that is downgraded to junk. The prospectus states it is not a money market fund and is riskier than one.

• ARCM charges 0.5% a year, versus an average of 0.2% for the similar funds below.
• Of that, 0.3% is the management fee; the rest covers other fund expenses.
• The fee includes a 0.19% waiver from the adviser, which may end.
• Using the prospectus's standard example, $10,000 invested would cost about $51 in the first year and $841 over 10 years (assuming a 5% annual return).

It holds very short-term Treasuries and investment-grade corporate bonds, and its price has moved little, even during stock market crashes.

ARCM could hold cash a retiree expects to spend in the next year or two, so stocks don't have to be sold in a bad year. In the 2020 COVID crash it fell about 1% and recovered within a month. In 2022 it dipped 0.9% and took about 4.5 months to recover. Its worst calendar year was 2021, at -0.26%. Its deepest price-based drop, 4.1% in November 2017, took about 23 months to recover, so losses are possible. The fund did not exist in 2008. Its yield over the 12 months to October 27, 2026, was 3.54%, paid monthly. The 0.50% expense ratio, about $51 in the first year on $10,000, takes a sizable bite from that income. Past results don't predict the future, and a plan should look at the whole portfolio, not one fund.

Matched by bond funds with the closest average maturity and issuer mix (N-PORT).