TrueMark today launched its second defined outcome ETF. The TrueShares Structured Outcome (August) ETF (AUGZ) invests in options tied to the S&P 500 Price Index.
The fund comes with an expense ratio of 0.79% and lists on Cboe Global Markets, the parent company of ETF.com.
The TrueShares lineup is expected to eventually cover 12 months, so that there is a fund in the family resetting every month of the year. Among the four firms issuing defined outcome ETFs, TrueMark stands out in that it takes a more fluid approach to its caps and buffers.
TrueMark’s twist on the concept means that the buffer against downside performance covers a range—in this case, 8-12%—and there is no set cap on upside performance. The fund uses options contracts, including Flexible Exchange (FLEX) options, on the S&P 500 Price Index and the SPDR S&P 500 ETF Trust (SPY) to achieve its goal. Rather than seeing their upside participation halted at a particular level, investors will simply see their percentage of participation in that upside reduced by a certain percentage due to the cost of the options contracts, the prospectus indicates.
One advantage of this is that investors do not risk missing out on compounded returns to the same degree that they would with fixed upside caps.
Contact Heather Bell at [email protected]