Today TrueMark and AllianzIM both rolled out new defined outcome ETFs that have their annual reset as of Oct. 1. The funds are part of ongoing series offered by both issuers.
The TrueShares Structured Outcome (October) ETF (OCTZ) resets annually on Oct. 1. It comes with an expense ratio of 0.79% and lists on Cboe Global Markets, the parent company of ETF.com.
The TrueShares are unique among the pantheon of defined outcome ETFs. They do not target a specific downside buffer, but a range of 8%-12%, with 10% protection being the goal for the entire outcome period. As for the upside, they do not have a set cap, but instead seek to give investors reduced exposure to the upside in the area of 85% so that investors never really find their participation in market upside halted.
For example, as of Sept. 30, the TrueShares Structured Outcome (July) ETF (JULZ) had returned 6.48% since its inception (with 273 days left before reset), while the S&P 500 had returned 7.96%. It is designed to deliver a range of 82% to 84% of the index upside.
According to Mike Loukas, CEO of TrueMark, the funds have been used in risk parity strategies, tactical trading, core equity exposure and for volatility management, among other purposes. The funds aim to allow investors to meet their portfolio goals in the face of high volatility and low yields.
The funds invest in flexible exchange (FLEX) options on the S&P 500 Price Index or ETFs tracking that index.
International investment manager Allianz entered the market earlier this year. Today’s launches include the AllianzIM U.S. Large Cap Buffer10 Oct ETF (AZAO) and the AllianzIM U.S. Large Cap Buffer20 Oct ETF (AZBO), with the former protecting against a 10% loss and the latter protecting against a 20% loss.
The funds both come with expense ratios of 0.74% and list on the NYSE Arca.
While AZAO has an upside cap of 16.30% before expenses, AZBO's pre-expense upside cap is 8.60%. The new products bring the total for the AllianzIM lineup of defined outcome ETFs to 6, with the October pair joining others covering April and August. The Allianz approach involves holding a portfolio of FLEX options on the S&P 500 Price Index.
Contact Heather Bell at [email protected]