ETF Family Uses Options Overlay Strategies

Oct 03, 2019

Reviewed by: Heather Bell

Edited by: Heather Bell

On Tuesday, advisory firm Liquid Strategies entered the ETF market with the launch of five funds implementing options overlay strategies and representing core asset classes.

The funds, their tickers and expense ratios are:

Overlay Shares Large Cap Equity ETF (OVL), 0.78%
Overlay Shares Small Cap Equity ETF (OVS), 0.82%
Overlay Shares Foreign Equity ETF (OVF), 0.96%
Overlay Shares Core Bond ETF (OVB), 0.79%
Overlay Shares Municipal Bond ETF (OVM), 1.00%

The new ETFs list on the NYSE Arca.

The five funds are all actively managed and invest in other ETFs representing—or securities within—their respective target asset classes, while buying and selling short-term put options on the S&P 500 Index with the goal of generating income.

The options overlay strategy is expected to provide positive returns in flat or rising equity markets, and could offer positive returns even when markets are declining due to the premiums from the options transactions, the prospectus notes.

However, the document also notes the options overlay may have a negative impact on the funds’ returns if markets experience extreme volatility.

Inspire Adds ESG Fund

Biblically responsible ETF issuer Inspire has added another ETF to its lineup. The Inspire International ESG ETF (WWJD) tracks the Inspire Global Hope ex-US Index, which covers developed and emerging markets.

The firm invests via a conservative Christian filter, excluding companies that have any degree of participation in the areas of abortion, gambling, alcohol, tobacco, pornography, the LGBT lifestyle or human rights violations, according to the prospectus.

Companies are also scored on their positive impact on the world in accordance with biblical values in the areas of products and services; workplace policy and environment; community contributions; and the environment.

The scores take into account everything from primary business activities to company philanthropy and policies, as analyzed by proprietary software. Ultimately, the underlying index will include the 200 top-scoring companies from the selection universe and equal-weight them, the document says.

Other ETF Developments

Effective Date	Affected Fund	Change
10/2/2019	Franklin Liberty U.S. Low Volatility ETF (FLLV)	FLLV's expense ratio was lowered from 0.50% to 0.29%.
10/1/2019	ProShares Global Listed Private Equity ETF (PEX)	PEX's expense ratio was raised from 2.78% to 3.13%.
10/1/2019	Xtrackers MSCI Japan Hedged Equity ETF (DBJP)	DBJP's expense ratio was cut from 0.46% to 0.45%.
10/1/2019	Xtrackers MSCI Europe Hedged Equity ETF (DBEU)	DBEU's expense ratio was cut from 0.46% to 0.45%.
10/1/2019	Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR)	ASHR's expense ratio was cut from 0.66% to 0.65%.
10/1/2019	SPDR Nuveen S&P High Yield Municipal Bond ETF (HYMB)	HYMB's name changed to the SPDR Nuveen Bloomberg High Yield Municipal Bond ETF, while its index changed from the S&P Municipal Yield Index to the Bloomberg Barclays Municipal High Yield Index.
9/30/2019	FormulaFolios Tactical Growth ETF (FFTG)	The expense ratio for SECT was lowered from 1.04% to 1.02%.
9/30/2019	Main Sector Rotation ETF (SECT)	The expense ratio for SECT was raised from 0.78% to 0.83%.
9/23/2019	SPDR ACWI IMI ETF (ACIM)	ACIM changed its name to the SPDR Portfolio MSCI Global Stock Market ETF and its ticker to SPGM. The expense ratio was lowered from 0.25% to 0.09%.
9/23/2019	SPDR Bloomberg Barclays Corporate Bond ETF (CBND)	CBND changed its name to the SPDR Portfolio Corporate Bond ETF and its ticker to SPBO.
9/23/2019	SPDR ICE BofAML Broad High Yield Bond ETF (CJNK)	CJNK changed its name to the SPDR Portfolio High Yield Bond ETF and its ticker to SPHY.
9/23/2019	SPDR STOXX Europe 50 ETF (FEU)	FEU has changed its index from the STOXX Europe 50 Index to the STOX Europe Total Market Index. It also changed its name to the SPDR Portfolio Europe ETF and its ticker to SPEU. The expense ratio was cut from 0.29% to 0.09%.
9/23/2019	SPDR Bloomberg Barclays TIPS ETF (IPE)	IPE changed its name to the SPDR Fportfolio TIPS ETF and its ticker to SPIP. The expense ratio was cut from 0.15% to 0.12%.
9/23/2019	SPDR Bloomberg Barclays Intermediate Term Treasury ETF (ITE)	ITE changed its name to the SPDR Portfolio Intermediate Term Treasury ETF and its ticker to SPTI.
9/23/2019	SPDR Portfolio Mortgage Backed Bond ETF (MBG)	MBG changed its name to the SPDR Portfolio Mortgage Backed Bond ETF and its ticker to SPMB.
9/23/2019	iShares Global Consumer Discretionary ETF (RXI)	The index for RXI changed from the S&P Global 1200 Consumer Discretionary Index to the S&P Global 1200 Consumer Discretionary (Sector) Capped Index.
9/23/2019	United States 3x Short Oil Fund (USOD)	USOD underwent a reverse 1-for-2 split.

Contact Heather Bell at [email protected]

Heather Bell

Heather Bell is a former managing editor of etf.com. She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.

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ETF Family Uses Options Overlay Strategies

ETF Family Uses Options Overlay Strategies

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