Main Management Fund Advisors has launched its third ETF, an actively managed global equities strategy with the potential for enhanced income through a “buy-write” overlay.
Buy-write strategies seek to provide enhanced income through call premiums.
The Main BuyWrite ETF (BUYW US) has been listed on Cboe BZX Exchange, coming to market with approximately $150 million in initial assets under management.
Main believes that, over time, asset allocation is more determinative than individual security selection in limiting the inherent variability of equity investing. Reflecting this belief, BUYW’s equities exposure is obtained by investing in ETFs which are considered undervalued and likely to revert to their mean values in the near term.
Eligible categories of ETFs include those delivering broad-market US, non-US developed, and emerging market exposures, as well as more targeted funds that focus on individual sectors, market capitalization segments, or investment themes.
When constructing the portfolio, Main will also seek to maintain an effective degree of diversification in all environments by limiting the ETF’s exposure to any specific market segment.
Once the ETF’s asset allocation is set, Main opportunistically utilizes buy-write overlays in a bid to enhance the fund’s yield. A buy-write is an options trading strategy that involves buying a security and simultaneously writing (selling) out-of-the-money call options on that security to generate enhanced income from the option premium.
To a lesser extent, the ETF may also engage in secured puts which involves selling out-of-the-money put options on the underlying securities while maintaining the cash on hand to cover the purchase of the security at a later date.
According to Main, BUYW may be viewed as a core holding within investors’ alternative allocation. The fund may serve to potentially reduce portfolio volatility while enhancing returns and increasing income in flat or downward-trending equity markets.
The ETF comes with an expense ratio of 1.31%.
Distributions are made to investors on a quarterly basis.