TrueMark Expands Its Structured Outcome ETF Suite with 'APRZ'

On Thursday, Rosemont, IL-based asset manager TrueMark Investments launched the tenth ETF in the True-Shares structured outcome product suite. The TrueShares Structured Outcome ETF (APRZ) seeks to provide investors with structured outcome exposure to the S&P 500 Price Index.

TrueMark believes its structured outcome ETF suite is the first of its kind to offer built-in downside buffers with uncapped upside participation. Additionally, APRZ is sub-advised by SpiderRock Advisors, a Chicago-based asset management firm specializing in option overlay strategies.

APRZ’s structure allows for the potential of an asymmetric return profile. The fund seeks to provide investors with returns (before fees and expenses) that track the S&P 500 Price Index while seeking to provide a buffer of 8-12% on that index’s losses over the fund’s one-year investment period. In practice, the fund adviser will target the buffer at 10% of index declines over the investment period following the first day of trading while also allowing for uncapped upside participation. APRZ’s expense ratio is 0.79%.

Negotiating Volatility

“After years of trending prices, it’s not terribly surprising to see volatility’s recent comeback spill-over into 2021. Choppy equity markets and the uncertainty surrounding the pandemic recovery have been met with accommodative monetary policy, leading to rising rates and yet another dilemma for investors,” said Michael Loukas, CEO at TrueMark Investments, the Advisor to TrueShares. “APRZ can help to alleviate the stress of market timing in today’s challenging conditions by serving as a practical tool for investors who are eager to take advantage of what could be another upcycle for equities but are wary of getting pinched by untimely pullbacks.”

“Frustrating environments often cause many to abandon equities prematurely, but we know from experience that it is during these exact periods in which it becomes absolutely vital to stay the course,” said Michael Loukas, CEO at TrueMark Investments. “Given its built-in buffer and uncapped upside participation structure, we’re excited to launch APRZ and make it easier for investors to ride out these difficult periods and still take advantage of the market’s long-term, upward trajectory.”

APRZ is the tenth monthly series in the TrueShares Structured Outcome ETF suite. Each fund will roll into a new investment position at the end of a year-long term, at which point the downside buffer and upside participation will reset based on current pricing for the options used by the strategy for each respective ETF.

“The return of volatility has been a reminder of just how valuable structured outcome products can be in the investors’ toolbox,” said Eric Metz, fund portfolio manager and Chief Investment Officer at SpiderRock Advisors. “We’re responding to the growing demand for a cost-effective vehicle that gives investors both upside exposure and downside protection peace of mind.”

Understanding Retirees’ Challenges

Loukas explained that “Increased equity volatility, low-yields, and non-sequential returns are a few of the more common challenges facing investors, particularly in the current market environment. When all three are front and center, as they have been in the past 12-18 months, the combination can give even the most experienced market practitioners fits. Many investors in or nearing retirement still need equities’ growth potential, but Ill-timed drawdowns can have a lasting negative impact on their portfolios. Investors and advisors alike are constantly striving to minimize exposure to these types of portfolio killers.”

Looking at how APRZ helps to maximize growth in today’s low-rate world without taking on too much risk, Loukas continues: “Maximizing risk-adjusted growth requires a portfolio to capture as much of the upside moves, or good volatility, as possible, while minimizing the aforementioned drawdown risk.  Yet, investors that attempt to achieve this goal are all too aware that there is no “free lunch” in volatility management.  Mitigating downside volatility generally requires sacrificing a portion of a portfolio’s upside potential.  In our opinion, APRZ’s unique combination of a built-in downside buffer and an uncapped upside participation rate allows an investor to maintain an appropriate level of volatility managed equity exposure without unnecessarily truncating the upside potential of outsized market gains such as the one seen in the last 12 months.  In other words, APRZ is geared to help an investor maximize equity growth potential and still avoid “overpaying” for basic volatility management.”

In determining what’s really driving the increased adoption of structured outcome ETFs, Loukas added: “While the pursuit of a volatility managed equity investment isn’t new, the ability to implement one in a liquid effectively, low-minimum ETF is.  Structured Outcome ETFs are extremely versatile tools that provide investors the opportunity to navigate complex portfolio challenges strategically.  Whether it be drawdown risk, an increased equity allocation to offset low-yields, or simply the ability to reinforce peace of mind in the face of uncertain markets, the different uses of Structured Outcome ETFs will continue to drive increase popularity among investors.”

What to Strive for

Concerning the long-term advantages for APRZ, Loukas states that “The downside buffer is a straightforward concept, mitigating portfolio losses is a direct benefit.  But it’s important to remember that missing out on significant chunks of outsized upward moves can also have a decidedly adverse effect on long-term compounded returns.  APRZ provides the opportunity to gain intelligent, volatility-managed equity exposure that addresses both sides of the volatility spectrum, not just one at the expense of the other.  Seizing that opportunity within a liquid, tax-conscious ETF wrapper, which optimizes its 12 month investment period annually, is an added advantage.”

He concludes that “The TrueShares Structured Outcome ETF Series is designed to help investors gain intelligent, volatility managed equity exposure by specifically addressing both sides of the volatility spectrum.  We believe this approach will best position them for long-term portfolio success by mitigating drawdowns and capturing a meaningful percentage of uncapped upside gains.”

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