XTR Profile
The Global X S&P 500 Tail Risk ETF is designed to offer investors a strategic approach to managing tail risk within their equity portfolios. The fund commits at least 80% of its total assets to securities that track the underlying index. This index is crafted to reflect a comprehensive risk management strategy that involves holding the constituent stocks of the S&P 500 Index while simultaneously employing a protective put strategy. This strategy entails purchasing long put options on the S&P 500 Index, providing a hedge against significant declines in the equity market.
The protective put strategy utilized by the fund is aimed at mitigating extreme downside risk. By integrating long put options, the fund seeks to safeguard against severe market downturns, which can significantly impact equity investments. The strategy is designed to maintain a balance between protecting the portfolio from large losses and capturing potential upside from the underlying S&P 500 stocks. This approach is particularly relevant in volatile or uncertain market conditions where tail risks are pronounced.
The fund's adviser anticipates a strong correlation of over 95% between the fund's performance and the performance of the underlying index, before accounting for fees and expenses. This high level of correlation indicates that the fund is closely aligned with the movements of the S&P 500 Index, ensuring that the risk management strategy is effectively integrated into the fund's overall performance. This alignment is crucial for investors seeking to use the fund as a hedge against significant market declines while maintaining exposure to the broad equity market.
As a specialized ETF focusing on tail risk management, the Global X S&P 500 Tail Risk ETF provides investors with a targeted approach to risk mitigation within the equity market. By combining a robust stock selection strategy with a sophisticated options-based hedge, the fund aims to offer a protective buffer against severe market drops, catering to investors who seek to safeguard their portfolios from unexpected and extreme market events.
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