Continuing on the successful listing of JULZ, TrueMark Investments on Tuesday launched AUGZ, the second ETF in the True-Shares structured outcome product suite. The TrueShares Structured Outcome (August) ETF is sub-advised by SpiderRock Advisors, a Chicago-based asset management firm specializing in option overlay strategies. The fund seeks to provide investors with structured outcome exposure to the S&P 500 Price Index. TrueMark, a Rosemont, IL-based asset manager, believes its structured outcome ETF suite is the first of its kind to offer built-in downside buffers with uncapped upside participation.[1]
AUGZ’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. AUGZ’s expense ratio is 0.79%.
“In our view, the market for structured outcome ETFs will be growing exponentially in the coming years, with a variety of approaches available to investors. TrueShares and SpiderRock have joined forces to establish a product suite which we hope investors will consider to be the home of the uncapped Structured Outcome strategy,” said Michael Loukas, CEO at TrueMark Investments. “An uncapped structure can offer several advantages in certain market environments, including higher correlations over time to upside movements in the underlying index compared to capped strategies, and the ability to capture the outsized growth years, or right tail events, that are so vital to long-term, compounded returns. With a built-in downside buffer, products like AUGZ can help investors that are concerned about the impact of market declines on their equity investments, to stay in the stock market in the face of volatility, which is extremely important in such low-rate environments. ”
AUGZ is just the second of twelve monthly series ETFs in the True-Shares Structured Outcome ETF suite. Each fund will roll over 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.
“As this period of market uncertainty continues to unfold, revealing the potential benefits of structured outcome products, we are thrilled to be partnering with TrueMark Investments as they bring the next ETF in their structured outcome suite to market” said Eric Metz, fund portfolio manager and Chief Investment Officer at SpiderRock Advisors. “We believe the ability to create an attractive risk-reward investment profile in a daily-traded, cost-effective vehicle should put these ETFs top-of-mind for investors looking to gain prudent large-cap, U.S. equity exposure.”
[1] Due to the cost of the options used by the Fund, the correlation of the Fund’s performance to that of the S&P 500 Price Index will be less than if the Fund invested directly in the S&P 500 Price Index without using options, and could be substantially less.