LHA launches second Market State Shares ETF

Little Harbor Advisors (LHA) has launched the LHA Market State Alpha Seeker ETF, which received orders totalling approximately 1,000,000 shares on its first day of trading (14 May), ending the day with net assets over USD25,000,000O.

MSVX is the second LHA Market State Shares ETF in what LHA intends to be a family of alternative ETF strategies. The title “Market State Shares” refers to the tactical nature of the investment strategies employed by the funds.

Managed by Mike and Matt Thompson, both Chartered Financial Anaylsts (CFAs), the MSVX is substantially similar to a related investment strategy that has been used by the brothers in separately managed accounts (SMAs) since January of 2015. The MSVX strategy seeks to provide positive returns across multiple market cycles that are generally not correlated to the US equity or fixed income markets. It employs quantitative models to observe and analyse the dynamics of market volatility. Portfolio net exposure is based on a proprietary process used to quantify market risk. One of the fund’s goals is to lessen the impact of market down-turns and to participate in market rallies.

Thompson says: “We believe that the cyclical dynamics of S&P 500 volatility, as represented by the VIX Index, along with the pricing of VIX futures contracts, offers insights and valuable information as to near-term market direction with an implied confidence factor. This allows us to shape portfolio holdings to determine which side of the market the portfolio will be exposed, how, and to what extent.”

LHA acquired a majority interest in Thompson Capital Management, LLC (TCM) earlier this year. 

According to Jeff Landle, CFA, LHA’s Chief Investment Officer: “We had been aware of TCMs volatility strategy for some time and believe if ever there was a period to pay attention to volatility it is today. Whether the current market continues its remarkable resilience to bad news or is simply a bubble waiting to burst, the stability or violence exhibited in the volatility cycle, provides insights of which the Thompsons’ strategy seems to take advantage.”