Gotham Asset Management is looking to short midcap and large-cap stocks with its latest exchange traded fund (ETF). Now, the issuer has launched the Gotham Short Strategies ETF (SHRT ) on the New York Stock Exchange. The actively managed ETF seeks long-term capital appreciation and to provide positive returns in down markets.
SHRT consists of long and short positions chosen from a universe of mid to large U.S. securities. The ETF is targeted to be approximately 100% long and 150% short with 50% net short exposure. Additionally, it takes long positions in securities that are believed to be undervalued and short positions thought to be overvalued.
See more: Gotham Seeks Value Through GVLU
As the fund’s subadviser, Gotham Asset Management expects that SHRT’s gross equity exposure will generally be at or below 250%. SHRT may invest in companies of any size and generally holds several hundred positions. Top holdings in the fund as of November 6 were (EMR), (NFLX), and (CELH).
A Systematic, Bottom-Up Valuation Approach
SHRT seeks to capitalize on pricing inefficiencies in the market. It takes a systematic, bottom-up, valuation approach to identify companies that appear to be undervalued or overvalued.
The fund uses swap agreements to gain short exposure to securities. The ETF will embed costs typically associated with short sales of securities in the cost of the swap. SHRT’s return from such instrument will be net of such expenses and any other expenses associated with the swap.
SHRT previously operated as a mutual fund, which commenced operations on Aug. 1, 2017. Before that, it was a private fund that launched on Feb. 1, 2008. The fund carries an expense ratio of 1.35%.
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