NightShares, a new ETF issuer led by an experienced team that has built and grown multiple ETF brands, is today launching its first two ETFs: the NightShares 500 ETF (NSPY ) and the NightShares 2000 ETF (NIWM ). These ETFs seek to capture value from the “night effect,” a persistent phenomenon whereby overnight markets have historically outperformed the daytime trading session on a risk-adjusted basis.
The strategy is based on academic research dating back to 2008, and these ETFs are designed for investors to efficiently capture this investor experience that is potentially better than the simple buy-and-hold approach that has heretofore dominated the industry. NSPY seeks to return the night performance of a portfolio of 500 large-cap U.S. companies. NIWM, meanwhile, seeks to return the night performance of a portfolio of 2000 small-cap U.S. companies.
“These futures-based ETFs provide easy access to after market trading performance and can appeal to buy-and-hold end clients of advisors as well as those looking for shorter-term opportunities,” said Todd Rosenbluth, head of research at VettaFi. “There is a lot of market-impacting news such as macroeconomic data and earnings releases that occur outside of when the stock market is open.”
In a news release announcing the launch of the funds, NightShares CEO Bruce Lavine said: “Though the outperformance of overnight markets has been identified and documented by a large body of research for some time, until now there has not been a simple way for ETF investors to capture the value of this phenomenon,” before adding: “With these innovative ETFs, we are giving investors exposure to broad equity markets focused on the overnight session, which can potentially improve performance and lower overall portfolio volatility.”
Lavine was one of the founding members of the iShares business, running product development and later the European iShares business. After that, he was the president, COO, vice chairman, and a board member of WisdomTree Investments from 2006 to 2021.
He is joined by a leadership team at NightShares that has collectively held senior roles at such firms as Barclays Global Investors/Blackrock, WisdomTree, State Street, and Pacific Life.
“This is a story we’re excited to tell, and we look forward to talking with institutions, advisors and the broader investor community about the potential benefits from integrating the night effect into their portfolios,” added Max Gokhman, chief investment officer of AlphaTrAI, a sister company of NightShares. “For instance, the historically lower volatility of the overnight session may lead to better up/down capture ratios, allowing investors to more comfortably maintain their target equity exposure through periods of market turbulence such as we have been experiencing throughout so much of 2022.”
NSPY and NIWM are listed on NYSE Arca and each have an expense ratio of 0.55%.
Additional information on NightShares, the night effect, and these funds can be found at www.NightShares.com.
For more news, information, and analysis, visit the Night Effect Channel.