ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Alternatives
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Dividend
    • Dual Impact
    • Emerging Markets
    • Energy Infrastructure
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Free Cash Flow
    • Future ETFs
    • Global Diversification
    • Gold & Silver Investing
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Megatrends
    • Modern Alpha
    • Multi-Asset
    • Night Effect
    • Portfolio Strategies
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
    • Thematic Investing
    • Volatility Resource
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • First Bitcoin ETF
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • Company
    • About Us
    • Swag Store
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Toroso Launches RORO, An ETF Worth Its Weight In Gold
News
Share

Toroso Launches RORO, An ETF Worth Its Weight In Gold

Aaron NeuwirthNov 18, 2020
2020-11-18

A new tactical rotation strategy ETF based on the behavior of lumber relative to gold began trading on the New York Stock Exchange on Wednesday.

The ATAC US Rotation ETF (NYSEArca: RORO) is the brainchild of Michael A. Gayed, CFA, Portfolio Manager of Toroso Investments, an investment management company specializing in ETF focused research, investment strategies, and services designed for financial advisors.

The ETF will track the ATAC Risk-On/Risk-Off Domestic Index (RORO.Index), designed to be a tactical US stock/Treasury rotation strategy based on the behavior of lumber relative to gold.

“We could not ask for a better ticker,” notes Gayed. “Historically, when lumber is outperforming gold, that tends to suggest we’re in a risk-on period of lower stock market volatility, on average.”

He continues, “When lumber is outperforming gold, the average volatility for the S&P is about 13.5%. When gold outperforms lumber, the average stock market volatility rises to about 19.4%, making for a pretty big difference.”
“The link is housing. As housing is such a key driver of U.S. consumer wealth, growth, and inflation expectations, lumber is the most leading indicator out there. Gold, on the other hand, is not really cyclical. It reacts to risk-off periods. So the idea is that these two areas say something about the risk for the broader equity markets.”

Making RORO Go Round

The ATAC US Rotation ETF is a tactical strategy designed to seek absolute returns across multiple market cycles. The Fund rotates offensively or defensively based on historically proven leading indicators of volatility, with the goal of taking less risk at the right time.

“When lumber outperforms gold, it will go into a combination of small caps and large growth,” he said. “When gold outperforms lumber, it rotates into treasuries. It looks at that on a weekly basis.”

Gayed continues, “I’ve always wanted to bring my approach to risk-on and risk-off trading to the exchange-traded marketplace. For investors looking to diversify with a US-focused tactical rules-based strategy in what may be a much more volatile cycle going forward, RORO may be a great way to take advantage of swings to come between U.S. stocks and Treasuries.”

He also discussed how RORO’s index was created.

“The way that the index was constructed is to feature lumber and gold as risk on, risk off signals, and a shorter, quicker timeframe than what’s in the paper, and make it very simple — rotate around these two.”

“The index is up about 21%, which is actually a very good year, in the context of the insanity, but it has gotten nowhere for 6 months. The bulk of this Index’s performance is coming out of Covid, and that’s when lumber prices started rising.”

Gayed continues with what he finds most interesting about the operation of RORO, “In a world of tremendous correlation, the correlation of the index is basically flat, which makes sense. It’s not in equities for the buy and hold tracking. It’s in them as plays for the risk on/risk off dynamic that lumbering won’t tell you about.”

In May of 2015, Gayed wrote an award-winning white paper titled “Lumber: Worth its Weight in Gold,” where he illustrated that strategies using the signaling power of Lumber and Gold result in stronger absolute and risk-adjusted returns than a passive buy-and-hold index.

Learn more about the fund here.

This article originally appeared on ETFTrends.com.


Content continues below advertisement

» Popular Pages

  • Tickers
  • Articles

Jan 27

ETF Issuer League: JPMorgan ETFs Almost $100 Billion

Jan 27

Main Management Market Note: January 27, 2023

Jan 27

As Recession Signals Grow, Turn to Risk-Managed ETFs

Jan 27

HGER Acts as a Compelling Solution for Inflation

Jan 27

Mutual Fund-to-ETF Conversions: The Future in 4 Charts

Jan 27

American Century ETF Duo Hits Key Buy Signals Friday

Jan 27

ACES and AMLP Aid Investing in the Energy Transition

Jan 27

Target Long Duration, High Quality Fixed Income

Jan 27

The Sharpe-r Way to Invest

Jan 27

Structure Matters: Volatility May Make 60/40 Unclear

QQQ

Invesco QQQ Trust

SPY

SPDR S&P 500 ETF Trust

VOO

Vanguard S&P 500 ETF

VGT

Vanguard Information...

SMH

VanEck Semiconductor ETF

XLK

Technology Select Sector SPDR...

VTI

Vanguard Total Stock Market...

SOXX

iShares Semiconductor ETF

BLOK

Amplify Transformational Data...

META

Roundhill Ball Metaverse ETF


Content continues below advertisement

Loading Articles...
Help & Info
  • Contact Us
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X