Aptus launches options-enhanced global ex-US equity ETF

Aug 9th, 2021 | By | Category: Alternatives / Multi-Asset

Aptus Capital Advisors has launched an actively managed global ex-US equity ETF that employs various options strategies to better manage risk and enhance returns.

John Gardner Chief Investment Officer Aptus Capital Advisors

John Gardner, Founder and Managing Member at Aptus Capital Advisors.

The International Drawdown-Managed Equity ETF (IDME US) has been listed on Cboe BZX Exchange and comes with an expense ratio of 0.65%.

The fund delivers exposure to both developed and emerging market companies, excluding the US, primarily through investing in broad market, passive ETFs targeting specific countries or regions.

The fund will allocate between 50–90% of its exposure to developed markets and 10–50% to emerging markets at any point. The allocation is based on a “yield plus growth” framework which factors in fundamental characteristics such as yield, growth, and valuation, along with momentum, to identify attractive markets.

Aptus may deploy various options strategies, primarily with the goal of managing drawdown risk by purchasing put options referenced to broad market indices or similar ETFs held by the fund. The expiration date for the put options will typically be between one and six months, while the strike price for the puts will typically be within 10% of the price of the reference asset at the time of purchase. Aptus expects to invest less than 5% of the fund’s net assets in equity puts at any time.

In seeking to better manage risk, Aptus may also purchase call options or utilize call option spreads on the Cboe Volatility (VIX) Index. Aptus expects to invest less than 1% of the fund’s net assets in VIX Index call options at any time.

Aptus may also opportunistically engage in covered call option strategies in a bid to generate additional income from writing (selling) call options on up to 100% of the securities owned by the fund.

IDME complements the $250m Aptus Drawdown Managed Equity ETF (ADME US) which launched in 2016 and applies the same strategy to the US equity market. ADME comes with a slightly higher expense ratio of 0.79%.

John Gardner, Founder and Managing Member at Aptus Capital Advisors, said: “Our Drawdown Patrol strategies have been a compelling solution for many advisors as they look to meet client needs in a low rate environment. We’re proud to have helped advisors help clients over the past five years, and we’re excited to extend our experience into international markets with the launch of IDME.”

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