ETF Watch: Virtus Plan ‘Enhanced’ Active Funds

Virtus files for 'enhanced' gold and short U.S. equity ETFs.
Reviewed by: Staff
Edited by: Staff

In a recent filing, Virtus details plans for two actively managed ETFs covering two very different areas with unique strategies. The Virtus Enhanced Gold ETF (VEG) and the Virtus Enhanced Short U.S. Equity ETF (VESH) will both list on the NYSE Arca.

VEG will use an options overlay strategy in an effort to outperform a standard gold investment. The fund will pair a commodity-linked investment via a Cayman Islands-domiciled subsidiary with an investment in cash and cash equivalents, as well as put and call options. The offshore investment is capped at 25% of the fund’s total assets, the prospectus said.

The fund’s options overlay is designed to provide additional income for the fund and enhanced exposure to gold’s performance.

VESH, in the meantime, will provide inverse exposure to the U.S. large-cap market through the sale of futures contracts on the S&P 500 and its sectors and through short sales of related ETFs. The fund’s strategy uses relative strength analysis to determine the weakest and strongest sectors, and because it is an inverse strategy, it overweights the weakest sectors while underweighting the strongest, according to the prospectus.

The filing did not include expense ratios.

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