A new ETF designed to protect investors from the risks of market volatility begins trading on Wednesday.
The Calamos S&P 500 Structured Alt Protection ETF (CPSM) promises to offer investors “100% downside protection” against index losses over a one-year outcome period, according to the company's press release.
Matt Kaufman, head of ETFs at Calamos, helped build the new product.
“There's no tricks. There's no magic,” he told CNBC's “ETF Edge” on Monday. “This is the secret sauce.”
Kaufman explained that the new ETF is located in three option centers. Investors in the Fund are subject to restrictions on the extent to which they can realize gains associated with the Fund Standard & Poor's 500.
“They all work together. It's a fully funded options package that provides maximum upside to the S&P 500 with 100% capital protection over a 365-day outcome period,” he said. “Then at the end of that year, the options reset, stay in the ETF and continue working.”
The fund will have an annual expense ratio of 0.69%.
In order to get the full downside protection against losses in the S&P 500 index promised by the fund, Kaufman noted that investors should buy it on Wednesday when it hits the market.
“If you buy on day one, you get that 100% protection,” he said. “(But) until day two (or) day three, there may be buying opportunities along the way.”
The fund is just one of a group of 12 structured protection ETFs the company plans to launch over the next year. Incoming funds include those aimed at protecting against losses associated with Nasdaq 100 And Russell 2000 Standards.
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