Arcanum debuts ETP that aims to “replicate the investment style” of Warren Buffett

Jun 9th, 2023 | By | Category: Equities

Bristol-based Arcanum Asset Management has introduced an actively managed ETP that aims to deliver a growth strategy purportedly based on the investment style of Warren Buffett.

Warren Buffett

Warren Buffett, Chairman and CEO of Berkshire Hathaway.

The Buffettique Growth Strategy ETP (BUFF) has been listed on London Stock Exchange, Deutsche Börse Xetra, and Euronext Amsterdam, coming to market through Leverage Shares’ white-label ETP platform.

The strategy claims to mirror Warren Buffett’s investment style, from smaller firms to larger quality companies trading at fair prices.

The ETP owns some shares in Berkshire Hathaway, invests in certain investment funds that are “Buffett-orientated”, and buys individual stocks that Berkshire either owns or that Arcanum believes meet Berkshire’s investment style criteria.

The ETP’s core portfolio, which accounts for 70% to 80% of its overall assets, consists of an approximate 20% allocation to Berkshire Hathaway, as well as 10% allocations to the Finsbury Growth & Income Trust, Scottish Mortgage Trust, Central Securities Corporation, and Pershing Square Holdings, all of which are investment vehicles that focus on large, cash-generating companies that are expected to dominate their industries for decades due to significant competitive advantages.

The remainder of the core portfolio is allocated to the Smithson Investment Trust and BlackRock Smaller Companies, both of which seek out undervalued small- and mid-cap stocks of high-quality companies with favourable long-term growth potential.

The ETP’s non-core sleeve, which accounts for the remaining 20% to 30% of its assets, is dedicated to a shorter-term, absolute return strategy typically based on just four US-listed securities each month. The strategy examines a number of short-term indicators to pick individual equities with immediate appreciation potential, or may utilize inverse ETPs to take advantage of broader market falls.

The ETP comes with a management fee of 1.00% as well as a 10% performance fee subject to a high water mark.

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