Under The Radar ETFs

January 15, 2019

AGFiQ U.S. Market Neutral Anti-Beta Fund (BTAL)

Even though it’s an equity ETF, the AGFiQ U.S. Market Neutral Anti-Beta Fund (BTAL) is not your typical buy-and-hold investment. The ETF goes long low-beta stocks and shorts high-beta stock, resulting in a market-neutral position.

When relatively safe, low-volatility stocks are outperforming their riskier, high-volatility counterparts, BTAL should trend up. That’s what happened in 2018, when BTAL trounced the market with a 15.1% gain.

Of course, when the opposite happens and investors bid up high-flying momentum stocks, BTAL tends to underperform the market significantly.

BTAL’s market-neutral positioning and its steep 1.06% expense ratio mean the fund isn’t suitable as a buy-it-and-forget-it long-term investment, but it’s an interesting tactical tool for making bets on beta.


BTAL 5-Year Returns



VelocityShares Daily 4x Long USD vs AUD ETN (DAUD)

Unlike other asset classes, currency ETFs  haven’t taken off with ETF investors. In aggregate, there’s a modest $1.7 billion of assets under management in all currency ETFs—nothing compared to the amount of money in stock, bond and even commodity ETFs.

Foreign exchange traders, who together trade trillions of dollars of currencies daily, haven’t gravitated toward ETFs like traders and investors of other asset classes.

Most of them still prefer to trade on the vast over-the-counter currency market, which is typically cheaper and offers more leverage.

That said, a batch of new currency products—some of which are delivering stellar returns—may pique the interest of some traders who may find the ease of trading currencies in a traditional equity brokerage account attractive.

A little over a year ago, VelocityShares launched a suite of 10 quadruple-leveraged currency ETNs, targeting the U.S. dollar against the euro, pound, yen, Australian dollar and Swiss franc. The 4x-leverage, while nothing new or big in the currency world, is a first for U.S.-listed ETPs.

The hefty leverage has resulted in some notable gains (and losses) for the young currency ETNs. After the U.S. dollar rallied against the Australian dollar last year, the VelocityShares Daily 4x Long USD vs AUD ETN (DAUD) surged 55%; and even with the recent pullback, the exchange-traded note is up 42% since inception.

Thanks to the 4x-leverage, it didn’t take that large of a move in the underlying currency pair to spur that huge gain. Going forward, these currency products are likely to make regular appearances on the lists of best- and worst-performing ETPs, raising their profile.


DAUD Returns Since Inception


Email Sumit Roy at [email protected] or follow him on Twitter sumitroy2

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