STF debuts two risk-managed Nasdaq 100 ETFs

May 25th, 2022 | By | Category: Alternatives / Multi-Asset

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Frisco, Texas-based investment advisor STF Management has debuted its first ETFs with the launch of two tactical asset allocation funds.

STF Management has made its ETF debut on Nasdaq.

STF Management has made its ETF debut on Nasdaq.

The STF Tactical Growth ETF (TUG US) and STF Tactical Growth & Income ETF (TUGN US) have been listed on Nasdaq with total expense ratios of 0.65%.

TUG has come to market with a sizable initial investment of approximately $160 million, while TUGN has launched with around $10m in assets.

The ETFs are driven by the proprietary Tactical Unconstrained Growth (TUG) Model, developed in 2014, which utilizes a quantitative, rules-based approach to asset allocation, shifting between Nasdaq 100 equity exposure and US Treasury securities.

The TUG Model is based on a diverse range of price signals for equities, fixed income, and commodities, including rates of change in correlation and volatility.

The strategy seeks to outperform the Nasdaq 100 over a full market cycle by remaining invested in equities when the market is rising and reducing equity exposure when the market is falling. When lowering their equity allocation, the funds may allocate to long-duration Treasury bonds or take a more defensive position by turning to money market instruments.

Both TUG and TUGN are powered by the same rules-based asset allocation strategy; however, TUGN also includes an actively managed options overlay that seeks to generate opportunistic income.

The options overlay, which may be based on up to 100% of the ETF’s assets, consists of selling out-of-the-money call options while simultaneously purchasing call options that are further out of the money. The strategy benefits from receiving the net premium across the option positions and will typically be profitable in bearish, range-bound, and slightly bullish stock markets. In strong bull markets, the strategy will suffer; however, losses will generally be capped when the Nasdaq 100 rises above the strike price on the long call options.

Jonathan Molchan, co-CEO of STF Management, said: “Both TUG and TUGN are a strategic part of STF Management’s mission to solve the two biggest challenges investors face in today’s economy: how to remain fully invested in the appropriate asset allocation throughout market cycles and how to also generate income that lasts now and through retirement.

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