On Thursday, April 16, Calamos Investments expanded its selection of autocallable ETF solutions with the launch of the Calamos Autocallable Growth ETF (CAGE).
CAGE operates with a net expense ratio of 74 basis points. True to its name, it seeks to provide long-term growth by exposing investors to a laddered portfolio of autocallable yield notes. Autocallables are market-linked investments that can provide returns or income based on the performance of a particular index.
See More: Uncertain Macro Environment May Call for Autocallable ETFs
Those who have already invested in the Calamos Autocallable Income ETF (CAIE ) may be familiar with how autocallables operate, but CAGE does things a bit differently. To start, CAGE does employ the same reference index as CAIE—the MerQube LargeCap Vol Advantage Index. This index offers exposure to E-Mini S&P 500 Futures contracts, targeting an implied volatility of 35% and 6% decrement.
A Distinctly Growth-Focused Approach
However, where CAGE differs from CAIE is how it approaches its autocallable barriers. The way the barriers work is that as long as the index doesn’t drop below a certain threshold, investors in the autocallable can continue to benefit from their strategy.
CAGE’s principal barrier sits at 50%, offering noticeable downside protection—10% higher than CAIE’s. Thus, as long as the MerQube index remains above 50%, investors can tap into compelling long-term principal. Should the index fall past 50% when the note is called, investors may be subject to loss of principal.
That being said, the real difference maker is where CAGE’s coupon barrier sits. The coupon barrier sits at 100%—essentially, it only gets called at the money. This is because CAGE is a fund that focuses on long-term growth rather than regular income. Furthermore, these notes are called only annually, rather than the monthly calls CAIE receives.
As an added benefit, CAGE’s laddered autocallable portfolio operates with a memory feature. If the index is down at the end of the first year, no coupon gets paid out. However, if, at the end of the second year, the index is higher, the missing coupon is retroactively credited.
See More: Calamos Showcases Autocallable Interest With Latest ETF Award
The third autocallable ETF to join the Calamos lineup, CAGE, follows immense momentum that began with both CAIE and the Calamos Nasdaq Autocallable Income ETF (CAIQ). CAIE, in particular, has been off to a strong start: not only has the fund won multiple awards, but it has already amassed over $800 million in assets under management, despite being on the market for less than a year.
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