Historical data suggest that while market timing is not a futile endeavor, it is certainly difficult. Investors that insist on such a course of action can gain some much needed assistance from the Hull Tactical US ETF (NYSE: HTUS).
The Hull Tactical US ETF, which debuted last year, tries to generate long-term capital appreciation through long and short positions in S&P 500 index-related ETFs. The fund was designed by investment veteran Blair Hull, who lost to Barack Obama in the Democratic Primary for the U.S. State Senate in 2004 and founder of the Hull Trading Company, which was acquired by Goldman Sachs.
Related: A Look at the Hull Tactical ETF
The current market environment is conducive to an ETF such as HTUS, which is actively managed, as highlighted by the ETF’s S&P 500-beating returns since inception. However, there are some complexities associated with HTUS.
“Hull says the aim is to beat the market but also enhance risk-adjusted returns. Simulations in his academic paper show annualized returns double that of the market, and a Sharpe Ratio four times as large, indicating one-quarter of the risk. This year’s trading shows how that can work. The ETF’s median daily price move this year is just 0.03%. It plods along when signals are mixed, but should bound higher when the coast is clear,” reports Chris Dieterich for Barron’s.
[related_stories]HTUS takes long and short positions in ETFs, leveraged ETFs and or other securities that follow the S&P 500. According to the prospectus, the fund may maintain long exposure of up to 200% of net assets, hold exposure to short positions limited to no more than 100% of net assets and adjust long and short positions when necessary to account for changing market conditions.
Related: Small- and Mid-Cap Dividend Growing ETF Opportunities
“The strategy will evolve over time, Hull says. In November, the ETF tweaked its strategy to incorporate predictions of one-day stock price moves; in its current configuration, positions are based on one-day and six-month forecasts,” according to Barron’s.
HTUS was designed to generate hedge fund-esque management and trading tactics as the managers will utilize advanced algorithms, along with marco and technical indicators, to anticipate future market returns. The active ETF will try to perform under all market conditions, selecting indicators that Hull Tactical Asset Allocation believes can best predict the next six months of return in the S&P 500, according to a press release.
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Hull Tactical US ETF
