A new ETF designed to protect investors from the risk of market volatility will begin trading on Wednesday.
The Calamos S&P 500 Structured Alt Protection ETF (CPSM) promises investors “100% downside protection” against losses in the index over a one-year results period, according to the company’s press release.
Matt Kaufman, director of ETFs at Calamos, helped develop the new product.
“There’s no tricks. There’s no magic,” he told CNBC’s “ETF Edge” on Monday. “That’s the secret ingredient.”
Kaufman explained that the new ETF is divided into three option positions.Fund investors are limited in the extent to which they can obtain fund-related returns. S&P 500 Index.
“They work together. This is a fully funded options program that caps S&P 500 upside and provides 100% capital protection over a 365-day outcome period,” He said. “Then at the end of that year, the options reset, stay in the ETF and carry on.”
The fund has an annual expense ratio of 0.69%.
Kaufman noted that to get the fund’s promised full downside protection against S&P 500 losses, investors would have to buy into the fund when it goes public on Wednesday.
“If you buy on day one, you’re 100 percent protected,” he said. “(But) even on the second day (or) the third day, there may be opportunities to buy all the way.”
The fund is just one of 12 structured protection ETFs the company plans to launch next year.Upcoming funds include those aimed at preventing Nasdaq 100 Index and Russell 2000 benchmark.
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