On Wednesday, ZEGA Financial, a registered investment adviser and investment manager known for helping investors successfully navigate volatile and uncertain markets through innovative hedging strategies, announced the launch of the ZEGA Buy and Hedge ETF (ZHDG).
The ETF is designed to provide broad U.S. equity large cap market exposure while seeking to limit downside risk in the event of a material market correction. ZHDG seeks to capture upside market movement to provide long-term capital appreciation while aiming to limit equity losses in any 12-month period.
“Investors want to benefit from the market’s upside but fear severe market downturns. Bonds are becoming less and less of a solution for risk mitigation with rates near all-time lows and inflation on the rise,” said Jay Pestrichelli, Co-Founder and CEO, ZEGA Financial, and co-author of the book “Buy and Hedge, the Five Iron Rules for Investing Over the Long Term.”
“The ZEGA Buy and Hedge ETF is a progressive core holding for investors seeking equity growth while aiming to mitigate the overall market downside. It functions like a traditional 60/40 portfolio without losing potentially critical periods of market participation,” said Pestrichelli.
Getting a Zeg Up on Opportunity
The ZHDG portfolio invests in index-based equity options and yield-producing assets. The portion of the portfolio invested in equity options provides long-term exposure to the equity markets, seeking upside potential while mitigating downside risk. The portion of the portfolio invested for income seeks cash generation to help purchase the equity options.
ZHDG aims to limit equity losses to 8-10% in any 12-month period. The total portfolio may still experience losses in excess of the 8-10% target range over a 12-month period. The underlying yield-bearing investments may experience losses, but ZHDG seeks to limit those losses to 10% through its investments in purchased put options.
The ZEGA team has a 10-year buy and hedge strategy track record with expertise in using options to shape the risk-reward profiles of its strategies.
ZEGA Financial partnered with the team at Tidal ETF Services to bring ZHDG to market.
For more information, visit zegaetfs.com/.