TrueMark launches fourth structured outcome ETF
TrueMark Investments has launched TrueShares Structured Outcome (October) ETF (OCTZ), the fourth ETF in the True-Shares structured outcome product suite.
OCTZ is sub-advised by SpiderRock Advisors, a Chicago-based asset management firm specialising in option overlay strategies.
The fund seeks to provide investors with structured outcome exposure to the S&P 500 Price Index. TrueMark believes its structured outcome ETF suite is the first of its kind to offer built-in downside buffers with uncapped upside participation, established by a stated market participation rate.
OCTZ’s structure allows for the potential of an asymmetric return profile. The fund seeks to provide investors with returns (before fees and expenses) that track the S&P 500 Price Index, while seeking to provide a buffer of 8-12 per cent on that index’s losses over the fund’s one-year investment period. In practice, the fund adviser will target the buffer at 10 per cent of index declines over the investment period following the first day of trading while also allowing for uncapped upside participation. Investor's upside participation is measured by an estimated market upside participation rate that is determined once underlying portfolio holdings are established on the first day of trading. OCTZ’s expense ratio is 0.79 per cent.
“In our opinion, strategies that put a hard limit (or “cap”) on positive returns, by their very design, aren’t necessarily well-positioned to participate in strong ‘up’ markets” says Michael Loukas, CEO at TrueMark Investments. “On the other hand, an uncapped structure may be able to participate more fully in ‘up’ markets, both over the full course of the investment period as well as intra-period. Combined with its built-in downside buffer, that‘s why we see TrueShares Structured Outcome ETFs like OCTZ as a next-generation alternative to existing defined outcome ETFs in the market today. The potential to help smooth out market ‘valleys’ may help investors—particularly those concerned about the impact of market declines on their equity investments—to stay in the stock market long enough to take advantage of any subsequent ‘peaks’ that are so vital to long-term returns.”
OCTZ is the fourth of twelve monthly series ETFs in the True-Shares Structured Outcome ETF suite. Each fund will roll over at the end of a year-long term, at which point the downside buffer and upside participation will reset based on current pricing for the options used by the strategy for each respective ETF.
“As this period of market uncertainty continues to unfold, revealing the clear potential benefits of structured outcomes products, we are thrilled to be partnering with TrueMark Investments as they bring the fourth ETF in their structured outcome suite to market,” says Eric Metz, fund portfolio manager and Chief Investment Officer at SpiderRock Advisors. “We believe the ability to create an attractive risk-reward investment profile in a daily-traded, cost-effective vehicle should put these ETFs top-of-mind for investors looking to gain prudent, large-cap US equity exposure.”