New Jersey-based money manager Toews Corporation has unveiled its Agility Shares ETF platform with the launch of two actively managed risk-controlled funds.
Philip Toews, CEO at Toews Corporation.
The ETFs are pitched at advisors seeking broad exposure to US equity and fixed income markets with a tactical management overlay that aims to reduce losses during downturns.
The Agility Shares Managed Risk ETF (MRSK US) and Agility Shares Dynamic Tactical Income ETF (THY US) have listed on Cboe BZX Exchange and come with expense ratios of 0.96% and 1.16%, respectively.
Both ETFs are anticipated to have high turnovers that could increase transaction costs borne by investors.
Managed risk
The Agility Shares Managed Risk ETF consists of an equity component and a fixed income component.
The equity sleeve provides US large-cap exposure primarily through futures contracts or ETFs linked to the S&P 500 Index and then uses a range of option strategies to improve the fund’s risk and return profile.
These may include writing out-of-the-money equity index call options or targeting put option spreads in a bid to increase income, as well as tactically buying at-the-money index put options to offset the risk of adverse price movements.
The fixed income sleeve provides exposure to the US investment-grade bond market while tactically purchasing Treasury securities or Treasury futures to manage interest rate risk. The fund is largely unconstrained and may invest up to 85% of its assets in fixed income securities.
Tactical income
Meanwhile, the Agility Shares Dynamic Tactical Income ETF provides investors with income through broad exposure to high-yield bonds using ETFs and derivatives.
In a bid to control risk and limit losses, the fund may switch up to 100% of its assets to a defensive positioning by purchasing short-term US Treasuries and other US and foreign cash equivalents.
The degree to which the fund will be risk-on is determined by proprietary technical analysis that focuses on the price momentum of the high yield bond market.
Prescient
Philip Toews, Chief Executive Officer at Toews Corporation, commented, “Over nearly a quarter-century of managing money for investors, our focus on downside risk mitigation appears to have been prescient. We think that investors, who have been experiencing ongoing market turmoil, may appreciate the availability of risk-managed strategies in ETF form.
“For many investors, recent market volatility is a reminder that risk-managed strategies can play a role in portfolios, but nobody wants to miss out on the rebounds. We want to remove the types of potential restrictions buffer products and other like-kind funds offer while striving to provide the best possible outcome for our investors.”