On Wednesday, Tuttle Tactical Management, LLC launched the Trend Aggregation Conservative ETF (TACE). The fund seeks to provide total return.
As Matthew Tuttle, CEO/CIO of Tuttle ETFs explains, “TACE is a conservative tactical asset allocation fund that it designed to replace where you would typically put bonds in a portfolio. This is because with interest rates this low it is highly unlikely that bonds will produce the types of returns going forward that they have in the past.”
In pursuing the fund’s investment objective, the Fund will invest in ETFs that primarily invest in fixed income securities and put options. ETFs will include those that invest in domestic and foreign fixed income securities of any credit rating maturity and duration.
Additionally, TACE will invest in fixed income securities that include high yield bonds (or “junk bonds”). The fund considers high yield bonds to be those that are rated lower than Baa3 by Moody’s Investors Service or lower than BBB– by Standard & Poor’s rating group. High yield bonds have a higher expected rate of default than investment grade bonds. TACE will also consider REITs and MLPs.
That Extra TACE Component
Tuttle continues, “Unlike other “conservative funds” that attempt to get most, or all, of there returns from fixed income (which is likely to be problematic), this has a fixed income component as part of its hedge but tries to get most of its returns from stocks. It does this by using a unique factor rotation model that first strips out the high flying stocks that, while they can be up a lot can also be down a lot, then it can rotate among Momentum stocks, value stocks, low volatility stocks, and quality stocks, with an embedded hedge that can bring the beta down to zero during a market decline.”
The fund may also invest in short high yield bonds and U.S. treasury securities. The Adviser’s models may also direct for investment in volatility and inverse volatility ETFs and ETNs, leveraged and inverse ETFs and ETNs, and individual equity securities of any market capitalization.
The Adviser may invest in volatility ETFs and ETNs which are structured to track futures on the CBOE volatility futures index. Inverse volatility ETFs and ETNs seek to provide investment results that match a certain percentage of the inverse of the performance of a specific benchmark on a daily basis. Because they reset daily there may be significant daily volatility associated with volatility and inverse volatility ETFs and ETNs.
In managing the Fund’s portfolio, the Adviser will engage in frequent trading, resulting in a high portfolio turnover rate.
For more information, head to https://www.tuttleetf.com/
This article originally appeared on ETFTrends.com.
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