US financial services firm ALPS has launched the Enhanced Put Write Strategy ETF, a new actively-managed fund aimed at delivering total return via selling listed one-month put options on the SPDR S&P 500 ETF Trust and investing the premium income received from selling such options in a portfolio of investment grade debt securities. The Enhanced Put Write Strategy ETF began trading on July 7 at the NYSE Arca.
The Enhanced Put Write Strategy ETF intends to provide income when the SPDR S&P 500 ETF Trust (SPY) is flat or rising in value while when SPY is declining in value, the fund may lose value because of the put options sold by the Fund, however, the fund’s income received would offset at least some portion of the losses from the decline in SPY’s value.
Simply put, investors who believe the market will remain flat or will rise may find PUTX a compelling option, as it also provides potential for relatively high income, said Mike Akins (pictured), senior vice-president and director of exchange-traded funds at ALPS advisers, who is responsible for the day‐to‐day management of the funds.
Selling puts is a frequently implemented income strategy, said Akins. “PUTX provides the beneficial features of put writing with the transparency and liquidity of the exchange-traded Fund (ETF) structure,” he said.
The firm has also launched two new funds – ALPS Sector Leaders ETF (SLDR) and ALPS Sector Low Volatility ETF (SLOW) – will Track the S-Network Sector Low Volatility and S-Network Sector Leaders indexes respectively.
By isolating factor indicators of growth, quality and low volatility on a sector-by-sector basis, ALPS believes the ETFs can provide diversified exposure without the sector bias often inherent in other factor based strategies, said Akins.
“Rather than investing in pure market cap indexes, which are usually tilted towards specific sectors, our equal sector weighting methodology may provide a better foundation for building diversified portfolios,” said Akins. “As a result, investors and advisers may achieve better risk adjusted returns.”
It’s become clear that there’s an important place for the equal sector weighting strategies in most investment portfolios, particularly in volatile markets, said Akins. “We’re excited at the prospect of applying the approach toward these historically proven factors and markets.”
The new ETF offerings expand on the success of ALPS’ dividend-factor focused ETF (SDOG), which recently passed the onebn dollar mark in assets under management (AUM).
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