Starting in May 2024, Calamos has unveiled a growing suite of Structured Protection ETFs that are changing how investors mitigate volatility in their portfolios. The funds offer 100% downside protection of capital over a one-year period while providing capped upside equity participation in the S&P 500, Nasdaq-100, and Russell 2000 in addition to tax alpha. All of these advantages sound like “having your cake and eating it too." This may leave investors wondering if these funds are too good to be true. And what’s the catch?
Considerations
Investors should consider a few factors regarding Calamos’ Structured Protection ETFs. The funds each have a net expense ratio of 0.69%. Given the extent of the downside protection, investors may view 69 basis points as a reasonable compromise.
Investors should also know that the funds have a one-year outcome period to take full advantage of the starting cap rate and protection. However, the funds can be freely bought and sold during that time.
Additionally, Structured Protection ETFs may not be ideal for investors who need monthly income. While the FLEX options are essential to our actively managed approach and realizing each fund’s investment goal, these options do not provide dividends.
More than Enough Potential Benefits
However, the Calamos line of Structured Protection products offers more than enough potential benefits to outweigh these concerns. The power of Calamos Structured Protection ETFs is truly remarkable.
By leveraging the firm’s investment and risk-management expertise and reimagining investors’ access to varying equity markets, Calamos has thoughtfully designed the funds to perform and protect in any market scenario, whether a flat market, a bull market, or even a market downturn. In essence, these ETFs offer innovative ways to manage risk, capitalize on market opportunities, and further diversify their investment options. The funds may be an ideal choice for investors nearing retirement age who seek to shield their investments from market volatility but still want upside potential. They are also a potential solution for individuals looking to move cash off the sidelines while limiting their risk.
Fund flows are already signaling that investors are confident in the Calamos strategy. Since the first fund launched in May, Calamos Structured Protection ETFs have raised $270 million in assets as of July 31, 2024.
All Structured Protection ETFs will have an annual expense ratio of 0.69%.
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Disclosure Information
The reference asset for the S&P 500 is SPY; the reference asset for the Nasdaq-100 is QQQ; and the reference asset for the Russell 2000 is IWM.
Before investing, carefully consider the fund’s investment objectives, risks, charges and expenses. Please see the prospectus and summary prospectus containing this and other information which can be obtained by calling 1-866-363-9219. Read it carefully before investing.
An investment in the Fund(s) is subject to risks, and you could lose money on your investment in the Fund(s). There can be no assurance that the Fund(s) will achieve its investment objective. Your investment in the Fund(s) is not a deposit in a bank. It is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. The risks associated with an investment in the Fund(s) can increase during times of significant market volatility. The Fund(s) also has specific principal risks, which are described below. More detailed information regarding these risks can be found in the Fund’s prospectus.
Investing involves risks. Loss of principal is possible. The Funds face numerous market trading risks. That includes authorized participation concentration risk, cap change risk, capital protection risk, capped upside risk, cash holdings risk, clearing member default risk, correlation risk, derivatives risk, equity securities risk, investment timing risk, large-capitalization investing risk, liquidity risk, market maker risk, market risk, non-diversification risk, options risk, premium-discount risk, secondary market trading risk, sector risk, tax risk, trading issues risk, underlying ETF risk and valuation risk. For a detailed list of fund risks see the prospectus.
Additional Information
There are no assurances the Fund will be successful in providing the sought-after protection. The outcomes that the Fund seeks to provide may only be realized if you are holding shares on the first day of the Outcome Period and continue to hold them on the last day of the Outcome Period, approximately one year. There is no guarantee that the Outcomes for an Outcome Period will be realized or that the Fund will achieve its investment objective. If the Outcome Period has begun and the Underlying ETF has increased in value, any appreciation of the Fund by virtue of increases in the Underlying ETF since the commencement of the Outcome Period will not be protected by the sought-after protection, and an investor could experience losses until the Underlying ETF returns to the original price at the commencement of the Outcome Period.
Fund shareholders are subject to an upside return cap (the “Cap”) that represents the maximum percentage return an investor can achieve from an investment in the funds’ for the Outcome Period, before fees and expenses. If the Outcome Period has begun and the Fund has increased in value to a level near to the Cap, an investor purchasing at that price has little or no ability to achieve gains but remains vulnerable to downside risks. Additionally, the Cap may rise or fall from one Outcome Period to the next. The Cap, and the Fund’s position relative to it, should be considered before investing in the Fund. The Fund’s website, www.calamos.com, provides important Fund information as well information relating to the potential outcomes of an investment in a Fund on a daily basis.
These Funds are designed to provide point-to-point exposure to the price return of the Reference Asset via a basket of Flex Options. As a result, the ETFs are not expected to move directly in line with the Reference Asset during the interim period.
Investors purchasing shares after an outcome period has begun may experience very different results than fund’s investment objective. Initial outcome periods are approximately 1-year beginning on the fund’s inception date. Following the initial outcome period, each subsequent outcome period will begin on the first day of the month the fund was incepted. After the conclusion of an outcome period, another will begin.
FLEX Options Risk – The Fund will utilize FLEX Options issued and guaranteed for settlement by the Options Clearing Corporation (OCC). In the unlikely event that the OCC becomes insolvent or is otherwise unable to meet its settlement obligations, the Fund could suffer significant losses. Additionally, FLEX Options may be less liquid than standard options. In a less liquid market for the FLEX Options, the Fund may have difficulty closing out certain FLEX Options positions at desired times and prices. The values of FLEX Options do not increase or decrease at the same rate as the reference asset and may vary due to factors other than the price of reference asset.
Shares are bought and sold at market price, not net asset value (NAV), and are not individually redeemable from the fund. NAV represents the value of each share’s portion of the fund’s underlying assets and cash at the end of the trading day. Market price returns reflect the midpoint of the bid/ask spread as of the close of trading on the exchange where fund shares are listed.
100% capital protection is over a one-year period before fees and expenses. All caps are pre-determined.
Cap Rate – Maximum percentage return an investor can achieve from an investment in the Fund if held over the Outcome Period.
Protection Level – Amount of protection the Fund is designed to achieve over the Days Remaining.
Outcome Period – Number of days in the Outcome Period.
Nasdaq® and Nasdaq-100 are registered trademarks of Nasdaq, Inc. (which with its affiliates is referred to as the “Corporations”) and are licensed for use by Calamos Advisors LLC. The Fund has not been passed on by the Corporations as to their legality or suitability. The Fund is not issued, endorsed, sold, or promoted by the Corporations. The Corporations make no warranties and bear no liability with respect to the Fund(s).
STRUCTURED ALT PROTECTION ETF and STRUCTURED PROTECTION ETF are trademarks of Calamos Investments LLC.
Calamos Financial Services LLC, Distributor
Calamos Financial Services LLC
2020 Calamos Court | Naperville, IL 60563
866.363.9219 | www.calamos.com | [email protected]
2024 Calamos Investments LLC. All Rights Reserved.
Calamos and Calamos Investments are registered trademarks of Calamos LLC.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
