On Tuesday, Tuttle Capital Management announced the launch of two new actively managed ETFs going after different parts of the societal spectrum. The FOMO ETF (FOMO) looks to invest in securities favored by thematic ETFs, while the Fat Tail Risk ETF (FATT) protects investors from major market downturns. FOMO will trade on the CBOE, FATT on the NYSE.
The Fear of Missing Out (FOMO)
The Fear of Missing Out (FOMO) is commonly defined as a social anxiety stemming from the belief that others might be enjoying something while the person suffering the anxiety misses out. The Fund’s strategy is related to the FOMO because it allows investors to invest in areas of the market currently favored by retail and individual investors, thus avoiding FOMO.
In pursuing the Fund’s investment objective, the Fund will invest in:
- Equity securities of U.S., foreign, and emerging market companies of any market capitalization, as well as special purpose acquisition companies
- Equity exchange traded funds (“ETFs”) and fixed income ETFs
- Volatility and inverse volatility ETFs and ETNs
- Leveraged and inverse ETFs and ETN that seek to provide the inverse performance of stock indices, treasury bonds, and volatility ETFs
The Fund may invest in SPACs that have yet to complete a business combination transaction or companies that have completed a business combination transaction with a SPAC within the last two years. A SPAC is a blank check company that has not yet merged with an operating company or even chosen a merger target. SPACs are formed to affect a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses.
The Fund will invest in fixed income ETFs that invest in domestic and foreign fixed income securities of any credit rating maturity and duration. Such fixed income securities will include high yield bonds (commonly known as “junk bonds”). The Fund considers high yield bonds to be rated lower than Baa3 by Moody’s Investors Service or lower than BBB- by Standard & Poor’s rating group. High-yield bonds have a higher expected rate of default than investment grade bonds.
The Adviser follows a proprietary tactical model in managing the Fund’s assets. The Adviser’s model evaluates market trends in various asset classes across different time frames. In managing the Fund’s portfolio, the Adviser will engage in frequent trading, resulting in a high portfolio turnover rate.
Cut FATT from Your Risk
The Fund is actively managed and seeks to achieve its investment objective by investing in:
- Cash and U.S. government bonds
- ETFs that invest in gold and gold-related derivatives
- ETFs that invest in U.S. equity securities of any market capitalization
- ETFs that invest in U.S. treasuries
- U.S. equity securities of any capitalization
- Volatility and inverse volatility ETFs
- Exchange traded notes (“ETNs”)
- Leveraged and inverse ETFs and ETNs that seek to provide the inverse performance of stock indices, treasury bonds, and volatility ETFs
Tail Risk in the Fund’s name refers to the financial risk of an asset or portfolio of assets moving more than three standard deviations from its current price, above the risk of a normal distribution. In a normal bell curve, the most probable returns are concentrated in a bulge at the center of the distribution curve, whereas the less probable, more extreme returns toward the edges are referred to as tails. The frequency of market disruptions and volatility have led to “fatter” tails than a normal bell curve might predict. The Fund’s investment strategy is designed to provide positive returns during periods of significant market disruptions.
“Markets move faster than ever before, and the Covid crisis showed us that bear markets can happen over months now instead of years,” says Matthew Tuttle, Chief Executive Officer and Chief Investment Officer of Tuttle Capital Management LLC (“TCM”), who serves as the Adviser to FATT. “Traditional investments can’t be relied upon to protect from the next market decline, and traditional tail risk strategies cost too much during bull markets.”
“FATT is designed to be able to make money during bull markets while still being able to make money during major market declines. Of course, there is no assurance that this will be successful,” Tuttle commented. “This means FATT can be a constant portfolio holding.”
FOMO comes with an expense ratio of 0.90% and lists on Cboe Global Markets. FATT charges 1.15% and lists on the NYSE Arca. Both funds are managed by Matthew Tuttle, the CEO and Chief Investment Officer of Tuttle Capital Management.
For more information, visit www.tuttlecap.com.
This article originally appeared on ETFTrends.com.