On Tuesday, Tidal Financial Group and GammaRoad Capital Partners debuted the GammaRoad Market Navigation ETF (GMMA ).
“As markets continue to experience bouts of market volatility, the launch of this product comes at the right time. Investors are increasingly seeking strategies that provide both downside protection and upside potential without the limitations of traditional hedging methods,” noted Gavin Filmore, chief revenue officer of Tidal Financial Group.
“With the GammaRoad Market Navigation ETF, GammaRoad aims to deliver a solution that adapts dynamically to changing market conditions, offering a more balanced approach to navigating risk while still capitalizing on growth opportunities,” he added.
With a net expense ratio of 0.75%, GMMA is an actively managed fund that seeks capital appreciation. The fund’s portfolio tracks the performance of the MarketVector GammaRoad U.S. Equity Strategy Index.
The index is constructed to provide rotating exposure to large-cap U.S. equities and U.S. Treasury bills. Exposure to both large-caps and Treasury bills is gained through investing in ETFs.
Three-Fund Strategy
Only three ETFs are used to fill the portfolio of the index. These funds are the ProShares Ultra S&P 500 ETF (SSO ), the SPDR S&P 500 ETF Trust (SPY ), and the SPDR Bloomberg 1-3 Month T-Bill ETF (BIL ).
In terms of weighing the portfolio, the index is recalculated on a daily basis. Three measures are employed by the index to calculate the weight for each ETF. First, the index team evaluates the state of consumer confidence in both the greater economy and the job market.
Additionally, the index evaluates the weekly price direction of SPY. Lastly, the index will examine the performance of economically sensitive commodities in comparison to gold. By doing so, the index seeks to gain a better understanding as to where the market is heading.
Generally speaking, GMMA aims to track the same performance returns as the index. However, the prospectus notes that GMMA may deviate from the index’s allocation and investment exposure.
“Investors want the upside potential of buying and holding U.S. equities, yet face the possibility of painful drawdowns like we’ve seen in recent decades,” sai Matthew Landon, CFA, president and chief operating Officer at GammaRoad. “Our strategy is designed to play both offense and defense, and seeks to provide equity investors with a less turbulent ride over the long term.”
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