Many investors are struggling with competing emotional forces given the 9+ month rally we have seen in the equity markets that has culminated in a recent parabolic move higher. On one hand, those that have been out of the market or that have been underinvested are experiencing FOMO (Fear of Missing Out), but at the same time FOLM (Fear of Losing Money) has kept them from adding exposure or leading them to sell equities here and potentially miss out on future gains.
Given everything that has happened in the past 3+ years, it is understandable that these emotions are very high right now. Part of the issue is there is still plenty to worry about: a possible hard landing, sticky inflation, geopolitical tensions, rising corporate debt defaults, higher interest rates, strained balance sheets, debt ceilings, elections, etc.
We believe both FOMO and FOLM can be addressed by including an allocation to a hedged equity strategy that provides both equity upside potential and risk mitigation during times of stress.
The Overlay Shares Hedged Large Cap Equity ETF (OVLH) is timely and differentiated from many of the other hedged equity funds in multiple ways:
- Uncapped upside since the Fund does not use short calls
- Clearly defined “floor” through long puts rather than a “buffer” that only provides limited downside protection
- Dynamic approach to managing the hedges in that they are moved higher as the market rises (removes the air gap in the hedges) and monetizes profitable positions during steep market declines while still remaining fully hedged
- Does not rely on security selection to generate alpha as this is proven to be difficult to do consistently over time
- Has performed as expected in both rising and falling markets
|3 Month||YTD||1 Year||Since Inception*|
|OVLH NAV Returns||8.43%||14.63%||9.26%||5.82%|
|OVLH Market Price Returns||8.16%||14.31%||9.14%||5.77%|
|S&P 500 Total Return Index||10.51%||20.65%||13.02%||9.43%|
|OVLH Standard Deviation||--||9.60%||13.45%||15.55%|
|S&P 500 Standard Deviation||--||11.15%||18.99%||22.17%|
*Performance data as of 07/31/23. Inception date 01/14/2021.
Performance data quoted represents past performance and is no guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. For the most recent month-end performance, please call 1-866-704-OVLS.
Overlay Shares are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Total Returns are calculated using the daily 4:00pm EST net asset value (NAV). Market price returns reflect the midpoint of the bid/ask spread as of the close of trading on the exchange where Fund shares are listed. Market price returns do not represent the returns you would receive if you traded shares at other times.
OVERLAY SHARES ETFS DISCLOSURES
Performance of less than one year is cumulative. You cannot invest directly in an index.
For a prospectus or summary prospectus with this and other important information about the Fund, please visit the Documents section of this website or call (866) 704-OVLS. Read the prospectus carefully before investing.
Shareholder Services: 1-866-704-OVLS
Investment Professionals: 770-350-8700 or firstname.lastname@example.org
Distributed by Foreside Fund Services, LLC, which is not affiliated with the Adviser.
The Fund invests in options that derive their performance from the performance of the S&P 500 Index. Selling (writing) and buying options are speculative activities and entail greater than ordinary investment risks. The Fund’s use of put options can lead to losses because of adverse movements in the price or value of the underlying asset, which may be magnified by certain features of the options. When selling a put option, the Fund will receive a premium; however, this premium may not be enough to offset a loss incurred by the Fund if the price of the underlying asset is below the strike price by an amount equal to or greater than the premium. Purchased put options may expire worthless and the Fund would lose the premium it paid for the option. The Fund may lose significantly more than the premiums it receives in highly volatile market conditions.
The Fund will invest in short term put options which are financial derivatives that give buyers the right, but not the obligation, to sell (put) an underlying asset at an agreed-upon price and date. The Fund’s use of options may reduce the Fund’s ability to profit from increases in the value of the underlying asset. The Fund could experience a loss or increased volatility if its derivatives do not perform as anticipated or are not correlated with the performance of their underlying asset or if the Fund is unable to purchase or liquidate a position.
The Fund was recently organized and has no operating history. As a result, investors have a limited track record on which to base their investment decision. Investments involve risk including the possible loss of principal.
S&P 500 Total Return Index - An index of 500 stocks chosen for market size, liquidity and industry grouping, among other factors. The S&P 500 is designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of large cap stocks. All cash distributions (e.g. dividends and income) are reinvested. Used as a proxy for "Stocks" above.
Standard Deviation - A measure of the dispersion of a set of data from its mean.