On Tuesday, Toroso Asset Management launched the UPAR Ultra Risk Parity ETF (UPAR), expanding its line-up of risk parity ETFs with a new product aimed at investors looking for more upside.
The new actively managed ETF is designed to provide leverage of 160–180% to a risk-balanced portfolio. UPAR, which is listed on the NYSE, seeks to replicate the returns of the Advanced Research Ultra Risk Parity Index, which provides leveraged exposure across four major asset classes.
“We feel it is important for investors to maintain a well-balanced portfolio that is built to withstand the wide range of potential economic outcomes looking ahead,” Alex Shahidi, co-CIO of Evoke Advisors, the fund sponsor of UPAR, said.
“Today, the main concern amongst investors is inflation, but two years ago deflation was dominating headlines,” Shahidi said. “The economy is doing well right now but may experience a downturn if the tailwinds of monetary and fiscal stimulus turn. Owning assets that are biased to outperform in each of these environments is critical in order to protect against adverse outcomes.”
UPAR delivers exposure to global equities, including U.S. equities, non-U.S. developed market equities, emerging markets equities and equity index futures, commodities through commodity producer equities and gold, U.S. Treasuries, and Treasury Inflation Protection Securities, according to regulatory filings.
The fund may also invest in U.S. Treasury futures contracts, reverse repurchase agreements, ETFs that track a broad-based index of equity securities for one or more asset classes or sub-classes, individual equity securities or depositary receipts representing an interest in foreign equity securities, such as American Depositary Receipts and Global Depositary Receipts, and ETVs issuing equity securities, according to regulatory filings.
The UPAR Index, which is leveraged, allocates its exposure using a risk-parity approach to balance risk across the four asset classes. Lower-risk asset classes, such as treasuries and TIPS, will generally have higher theoretical allocations than higher-risk asset classes, such as global equities and commodities.
The ETF is managed by Michael Venuto, co-founder and chief investment officer for Toroso, and Charles Ragauss, portfolio manager for Toroso, and has an expense ratio of 65 basis points.
UPAR is a more leveraged sequel to the RPAR Risk Parity ETF (RPAR), which has amassed $1.6 billion in assets under management since its inception in December 2019. RPAR has an expense ratio of 51 basis points and is also jointly managed by Venuto and Ragauss.
“RPAR has earned about 13% per year since inception and was only down about 4% during the first quarter of 2020 when global equities plunged over 20%. Its success helped us launch UPAR, which is essentially 1.4 times RPAR,” Shahidi said. “Over the long run, RPAR seeks comparable returns to equities with less risk while the more levered UPAR seeks higher returns than equities with comparable risk.”
For more information, visit www.torosoinv.com.
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