For this week’s episode of ETF 360, ETF Trends CEO Tom Lydon and CIO Dave Nadig spoke with Darren Schuringa, CFA, the CEO at ASYMmetric ETFs, who discusses the first ETF released by the company along with advice for clients dealing with risk management, and strategy.
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Schuringa brings up the ASYMshares® ASYMmetric 500 ETF (ASPY) right away, as it is the first ETF released by ASYMetric ETFs, and given the times the market is in, it’s a fund designed to provide protection against bear market corrections, as well as capturing the upside of bull markets.
“It’s great for investors who are looking to stay invested in the market while knowing they have some built-in protection,” Schuringa adds.
As far as ASPY being a disruptive tool of sorts, taking on a risk-on/risk-off position depending on how the market is performing, Nadig asks about the signals needed to show what to consider when accounting for risk. For Schuringa, he clarifies that ASYMmetric is driven by technology coming out of one of the biggest hedge fund seeds of 2015. Ultimately, it’s driven by proprietary priced-based algorithms, which look at the market’s price movements.
It may sound simple, but as Schuringa makes clear, “We’re focused on what the market is doing, and that’s telling us how we should be positioning the portfolio.”
For example, when market risk is rising, market prices are trending down, and volatility is spiking. So the solution is to reduce the portfolio exposure. This may be common sense, as Schuringa notes, but investors can only lose the money they have invested in the market.
With the technology ASYMmetric has, if the market wants to run higher, the idea is to follow the market’s up, as it’s about trends following strategy. However, what ASYMmetric is looking for is when the market breaks these trends. As explained previously, the effort is there to participate in a full bull market run while being protected in a fair bear market.
“We’re removing the human element. We’re systematically managing net exposures in the portfolio because we can be our own worst enemy,” Schuringa adds.
He goes on to explain how the technology is there to adjust appropriately to take away the qualities had by humans that function on some basic emotions, which can come at a cost. It’s really all about finding the best way to profit. That’s the purpose of ASPY.
Looking back at how COVID-19 initially hit the market, leading to a drop to 24% in March 2020, ASPY was able to go into a risk-elevated position, which explained that there was a lot of uncertainty in the market, meaning it was market neutral. So, when the drop occurred, investors in ASPY found themselves to be flat for the month, putting them up 10 basis points. Thanks to the signals of the fund, investors’ capital was protected from the worst of COVID, which is the kind of best-case scenario one would hope for.
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