ETFs that generate upside when markets falter are receiving renewed attention this month. One for investors to consider is the AGFiQ U.S. Market Neutral Anti-Beta Fund (BTAL).
BTAL tracks an equal-weighted index that takes long positions in low beta US stocks offset by short positions in high beta US stocks. It provides consistent exposure to the anti-beta factor by investing in the underlying index which reconstitutes and rebalances monthly in equal dollar amounts in equally weighted long low beta positions and equally weighted short high beta positions within each sector.
Proving its worth in a rocky market, BTAL jumped 3.78% on above-average volume, vaulting its gain over the past week to over 9% while bringing its year-to-date gain to nearly 18%.
So, even taking into account the Coronavirus and the correction that’s happened so far, this has been taking place beforehand. BTAL has had positive returns, and perhaps the market could be taking a defensive tone, meaning a shift in market positioning could occur.
Better With BTAL
“True to its name, BTAL’s beta coefficient is negative, so it’s buoyant when the stock market swoons. To that effect, the ETF gained 4 percent as the broad market headed hard south in February,” according to Seeking Alpha.
The benefits will emphasize how BTAL is a risk-diversifier, so with after-market corrections, because of those protections, an investor will not have gone down as much. Less risk ends up benefiting the portfolio, and the investor will have more wealth as well. Additionally, investors will be able to build more wealth, going forward, because they’ll be starting from a higher level.
As recession fears perk up and Treasury yields remain low, risk-off is likely to be the order of the day and that’s an environment suitable for upside in BTAL.
BTAL is considered an alternative investment and as such can act as an important portfolio diversifier and an avenue for reducing correlations. While not zero, BTAL’s correlations to broader benchmarks, such as the S&P 500, are low relative to pure beta instruments.
For more investing ideas, visit our Alternatives 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.