CIO Insights: August
By Jordan Waldrep, CFA
We listed the first two TrueShares ETFs on March 2, 2020, as the Corona Virus was pushing the economic and financial markets to the brink. After the experience of 2008, the Fed moved quickly with multiple facilities to ensured that we did not experience financial crisis as people around the world sheltered in place. Overall, the Fed’s action stabilized the situation and the market has generally recovered, with the S&P 500 only off -2.5% from its high level on Feb 19, 20201. Despite the recovery, it has remained a challenging period to manage assets with economic strains, continued viral contagion, and social unrest.
Turning to our funds, the TrueShares Technology, AI and Deep Learning ETF (LRNZ) is off to a very strong start relative to its benchmark, the NASDAQ Composite Index. LRNZ is focused on investing in companies that are on the leading edge in the application of AI and have new opportunities for growth and expansion despite what is going on around them in the larger economic environment. This played out in the earning season with multiple names delivering on earnings and raising expectations despite the economic conditions. From its inception through 07/31/20, LRNZ was able to deliver alpha, outperforming its benchmark by 19.60% (@ NAV). Management believes the drivers for these companies are still in place for longer-term growth.
The other fund we launched in March, TrueShares ESG Active Opportunities ETF (ECOZ), invests in what we believe are high-quality, large-cap domestic stocks, with an eye on avoiding the risks that come from environmental, social, and governance issues. ECOZ also had a strong start, outperforming S&P 500 Index by 4.26% (@ NAV) since inception, with Information Technology and Industrials leading the way. The fund is designed to deliver on ESG principles by avoiding certain risks inherent in each sector we invest in, with a goal of driving meaningful improvements in overall metrics, including a drastically reduced carbon footprint.
As we look forward, we recognize that there are potentially difficult times ahead. The challenges facing us over the past 6 months do not look like they will be ending any time soon. That is why we are excited to launch our Structured Outcome ETFs. The first of twelve ETFs launched on July 1, 2020. JULZ seeks to provide investors with a new way to approach the market, with structured exposure to the S&P 500 Price Index protecting investors from the first 8-12% (targeting 10%) of that index’s losses while participating in an estimated 82-84% of market gains2. AUGZ will launch on August 3rd as we expand the series. We think this series of funds will be extremely useful to investors in the unpredictable days ahead.
1. Source: Bloomberg. One cannot invest directly in an index.
2. Estimated upside market participation rate represents the relative exposure of the fund’s call options to participate in the potential upside movement of the S&P 500 Price Index. This will be determined by the relative price of call and put options at the start of the investment period (12-month period). There is no guarantee that the fund will be successful in providing these outcomes or objectives in any period.
ABOUT THE AUTHOR
JORDAN C. WALDREP, CFA
Principal & Chief Investment Officer
Mr. Waldrep has been in the investment management industry for over 16 years. Prior to joining TrueMark Investments, Mr. Waldrep was most recently at USA Mutuals, working as a portfolio manager for multiple funds. Prior to that, Mr. Waldrep was the portfolio manager for a pair of long equity portfolios at Blackfin Capital and a principal at Hourglass Capital providing research for a long-short hedge fund. Mr. Waldrep received his MBA in Finance from the University of Texas, McCombs School of Business in 2004 and his bachelor’s degree in Biology and History from Texas A&M University in 1999. Mr. Waldrep is also a Chartered Financial Analyst.