A new ETF designed to protect investors from the risk of market volatility will begin trading on Wednesday.
The Calamos S&P 500 Structured Alt Protection ETF (CPSM) promises to provide investors with “100% index downside protection” against index losses for one year, according to a company press release.
Calamos ETF head Matt Kaufman helped create the new product.
“There are no tricks here. There’s no magic,” he said Monday on CNBC’s “ETF Edge.” “It’s the secret sauce.”
Kaufman explained that the new ETF has three options positions. Fund investors are subject to restrictions on the extent to which they may receive profits associated with S&P 500 Index.
“They all work together. This is a fully funded options package that provides upside potential for the S&P 500 to the limit with 100% capital protection over a 365-day period.” He said. “Then, at the end of that year, the options reset: stay in the ETF and keep working.”
The fund will have an annual expense ratio of 0.69%.
To get the full protection against losses in the S&P 500 index that the fund promises, Kaufman noted that investors should buy it on Wednesday when it hits the market.
“If you contribute on day one, you will receive 100% protection,” he said. “[But] even the second day [or] on the third day there will likely be buying opportunities all along the way.”
The fund is just one of 12 structured defensive ETFs the firm plans to launch over the next year. Upcoming funds include funds aimed at protecting against losses associated with Nasdaq 100 And Russell 2000 landmarks.
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