Agility Shares promotes alternative to buffered outcome ETF as market roars up
Since launching active ETFs in the summer, Agility Shares has raised close to USD51 million. The ETFs are managed by USD2.1 billion Toews Asset Management and Dan Kullman (pictured), Director of Education and Training at the firm explains that the majority of the asset raise has been in THY, the firm’s Agility Shares Dynamic Tactical Income ETF, while the smaller asset base has gone into MRSK, the Agility Shares Managed Risk ETF, designed to attempt to lower drawdowns and lessen risk without capping any potential gains.
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Kullman says: “MRSK has been tracking the market as it was designed to seek to do, keeping that hedge in place, but participating in equity markets.”
Agility Shares is new to the ETF market and the registered investment adviser world and the platforms that many of them use to access investments, Kullman says.
“It’s been part of the learning curve of entering the ETF space,” he says. “Once the advisory community understands the underlying structure and process around it and it gets more visibility, we believe we may see further growth.”
MRSK will have an opportunity to demonstrate its potential viability, Kullman believes, commenting that exposure to the S&P 500 Index is an important part of a portfolio, especially since it has benefited from the Fed’s support during the market volatility of early 2020.
“But on the other side of the equation, the risk that has been built up into that asset class is continuing to increase as valuations go higher and higher.”
The addition of Tesla within the S&P 500 Index on the 21st of December is going to push things ever higher, he says.
“You want to be part of this asset class but owning it in an unhedged manner could be problematic.”
As an alternative to a buffered ETF, it makes sense, he believes, when investors seek to have exposure to the equity market but also want risk management.
Other option overlay products in other markets might be on the cards.
“The key thing is that we are going to be getting the story out there to the RIA community so they know there is a possibility of participating in markets while remaining hedged,” Kullman says.