ALPS to close US equity put strategy ETF

Jun 13th, 2017 | By | Category: ETF and Index News

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The US ETF provider ALPS has announced the closure of the US Equity High Volatility Put Write Index Fund (NYSE Arca: HVPW). The fund will close to new investors on 21 June 2017 and will liquidate on 26 June 2017.

ALPS to close US Equity ETF

The US Equity High Volatility Put Write Index Fund (NYSE Arca: HVPW) will close to new investors on 21 June 2017 and will liquidate on 26 June 2017.

The decision to close the fund was made by the ALPS ETF Trust’s Board of Trustees. On consideration of the current market conditions, as well as the prospects for growth in the fund’s assets among other considerations, the board determined it was in the best interests of the fund and its shareholders to liquidate the fund’s shares. The last day of trading is scheduled as 23 June 2017.

The fund will immediately begin the process of closing down and liquidating its portfolio, which will increase the fund’s cash holdings and move the fund away from its investment objective.

Any person holding shares in the ETF as of the liquidation date will receive a cash distribution equal to the net asset value of their shares. Shareholders receiving this cash distribution will not incur transaction fees in connection with this distribution or the liquidation of their shares.

The ETF tracks the NYSE Arca US Equity High Volatility Put Write Index. The index reflects the performance of a portfolio of short put options on a selection of the largest capitalised stocks which also have listed options and which have the highest volatility, as determined by NYSE Arca.

Put options are financial instruments that give the owner/buyer the right but not the obligation to sell a specified quantity of a security at a predetermined price on or before the expiration date. The strategy seeks to collect income from put option premiums when the underlying stocks rise in price or trade sideways, but the portfolio will lose value if the underlying stocks fall in price.

Investors looking for an alternative put-write strategy could try the WisdomTree CBOE S&P 500 PutWrite Index Fund (NYSE Arca: PUT) which has $53 million in assets and has a net expense ratio 0.38%.

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