The current low-yield environment is conducive to new entrants that offer active management and alternatives to standard assets. The Leatherback Long/Short Alternative Yield ETF (LBAY), which debuted Tuesday, can fill voids created by ultra-low interest rates.
LBAY is issued by Florida-based Leatherback Asset Management.
“Leatherback aspires to be the premier provider of actively managed, liquid alternative ETF strategies. Leatherback wants to put investors first by providing transparent, liquid, low-cost and tax-efficient alternative investment solutions,” according to the firm.
LBAY is Leatherback’s first ETF, although the issuer is planning another near-term launch.
The new fund seeks “to identify idiosyncratic opportunities where a security’s price may be poised to decline and will build “short” positions as determined by the Fund’s management. Additionally, the Fund may write covered calls when Leatherback believes call premiums are attractive relative to the price of the underlying securities,” according to the issuer.
ETFs Aiding Investing Accessibility
Long/short strategies, previously the territory of high-level professional investors, have been made more accessible by exchange traded funds. That is a good thing because long/short funds can help lower the drawdowns experienced when markets tumble.
In addition to the ease of managing one position as opposed to two or more, the expressed view captured in one ETF is also more cost-effective. Furthermore, it may give an investor access to additional returns, as opposed to a long-only or short-only position, provided the markets go in the intended direction.
“I am thrilled to be bringing our first ETF to market. LBAY represents the type of dynamic, innovative, active approach that investors of all types should have available to them, but which for too long have been reserved for institutions and accredited investors,” said Leatherback’s Michael Winter in a statement. “With bond yields at historic lows, investors are looking elsewhere for the income they need. Passive strategies too often come with misunderstood or misattributed risks, and active strategies in a mutual fund or hedge fund wrapper burden investors with onerous lockups and high fees. With LBAY, investors now have a powerful tool for adding alternative yield to their portfolios, guided by experienced active management.”
The new ETF charges 0.95% per year, or $95 on a $10,000 investment.
For more on active strategies, visit our Active ETFs Channel.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.