Closing Defensive Position In ETF Insider Portfolio

by on October 18, 2013 | ETFs Mentioned:

We are closing out one of the defensive positions in the ETFdb Insider portfolio today in light of this week’s developments on Capitol Hill. Politicians managed to strike a deal in the nick of time, in true Washington D.C. fashion of course, helping to steer the nation away from default. More importantly, the bipartisan bill that President Obama signed on October 16th effectively ended the federal government shutdown [see also The Biggest Technical Glitches On Wall Street].

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We are closing our position in the QuantShares U.S. Market Neutral Anti-Beta Fund (BTAL) in light of the positive developments seen out of Washington D.C. this week, which have undeniably helped to restore investors’ confidence:

  • Closed Position: Long QuantShares U.S. Market Neutral Anti-Beta Fund (BTAL)
  • Date Opened: 9/27/2013
  • Holding Period: 12 days
  • Closing Price: $19.60
  • Return: +0.20%

Recommendation Recap

We originally initiated a long position in BTAL in an effort to defensively position ourselves in anticipation of a steep correction, similar to the debt drama-induced one seen at the end of 2012. The correction came as we had anticipated, however, the market’s reaction threw us a curvevball. Despite looming uncertainty, broad-based equity indexes kept afloat during the two weeks of the government shutdown as investors expressed great optimism. As such, BTAL failed to generate a meaningful positive returns because the losses seen in high beta stocks did not exceed those seen in the low beta ones.

With the government shutdown behind us and the holiday shopping season ahead, we feel that the market has more tailwinds than headwinds ahead of it at this point in time, prompting us to close out our defensive position for a minor profit.

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Disclosure: No positions at time of writing.