Use NightShares ETFs in the Alternatives Sleeve of Client Portfolios

Advisors can use NightShares ETFs in the alternatives sleeve of client portfolios.

Alternative assets are used to reduce the overall risk and diversify client portfolios, as alternatives should have minimal correlation to stocks or bonds. These non-correlated assets can minimize the volatility of the portfolio and often lead to higher overall portfolio returns.

NightShares ETFs provide exposure to the night effect, a persistent phenomenon whereby overnight markets have historically outperformed the daytime trading session on a risk-adjusted basis. The night session of the market has lower correlation to the full market session than commonly used alternatives such as real estate and equity hedge funds, making it a useful tool for diversifying client portfolios.

“Advisors are looking to use ETFs to provide diversification to their broad U.S. equity market exposure, but there are ways to invest in equities in a less correlated manner. Some of them are lesser known than others,” Todd Rosenbluth, head of research at VettaFi, said.

The night session of the U.S. large-cap equity market — accessible through the NightShares 500 ETF (NSPY) — is less correlated to the full market cycle than real estate and equity hedge funds, based on an analysis of the past 15 years. The night session also has low correlation to the returns of other alternatives, including commodities and precious metals.

NSPY offers focused exposure to the night performance of 500 large-cap U.S. companies.

For investors looking to maintain day exposure but overweight the night, the NightShares 500 1x/1.5x ETF (NSPL) tilts toward the night. NSPL provides investment results, before fees and expenses, that correspond to 100% of the performance of a portfolio of 500 large-cap U.S. companies during the day and 150% of the portfolio performance at night.

The NightShares 2000 ETF (NIWM) provides exposure to the night performance of 2000 small-cap U.S. companies.

For more news, information, and analysis, visit the Night Effect Channel.