Syntax Advisors have announced the successful consolidation of several Syntax Stratified ETFs into the Syntax Stratified LargeCap ETF (SSPY US).
This reorganization brings together the Syntax Stratified MidCap ETF (SMDY US), Syntax Stratified SmallCap ETF (SSLY US), Syntax Stratified US Total Market ETF (SYUS US), and Syntax Stratified Total Market II ETF (SYII US) under the SSPY banner, which debuted as Syntax’s first Stratified ETF in January 2019.
Additionally, the Syntax Stratified US Total Market Hedged ETF (SHUS US) has been reorganized into the Stratified LargeCap Hedged ETF (SHUS US).
As part of the reorganization, both SSPY and SHUS have migrated to Exchange Traded Concepts‘ platform.
This move streamlines Syntax’s fund lineup by consolidating its offerings into SSPY, which tracks the Syntax Stratified LargeCap Index. This smart beta index utilizes S&P 500 constituents, grouping them based on Syntax’s patented business classification system, which organizes companies with similar business risks into functional groups. The index’s unique structure results in eight distinct sectors: consumer, energy, financials, food, health care, industrials, information, and information tools. Each sector is equally allocated, and the portfolio is rebalanced quarterly.
Syntax’s innovative weighting methodology aims to provide more balanced exposure to US large-cap stocks by spreading portfolio risk across different business functions rather than concentrating it in the largest capitalized companies. This approach offers a differentiated strategy compared to traditional market-cap-weighted indices, potentially enhancing portfolio diversification.
Meanwhile, the newly reorganized SHUS continues to invest in the same large-cap companies as SSPY but adds an actively managed hedging strategy to protect against downside risk during negative market movements.
Garrett Stevens, CEO of Exchange Traded Concepts, remarked: “We have known the Syntax team for a long time and look forward to this new venture. We hope investors will be excited by the updates that have been made to these two funds and can’t wait to see their potential for growth.”
While most of the reorganization was seamless for shareholders, it is worth noting that investors in SMDY and SSLY may face tax liabilities, as the restructuring of these funds is considered a taxable event.