How does the HTUS ETF's market-neutral strategy work?

The HTUS ETF's market-neutral strategy involves holding 150% long exposure to the Russell 1000 Value Index (the "Long Component") and 50% short exposure to the Russell 1000 Growth Index (the "Short Component"). This combination allows investors to express a value over growth investment view.

What are the underlying indices that the HTUS ETF tracks?

The HTUS ETF tracks the performance of two underlying indices: the Russell 1000 Value Index, which represents the mid and large-capitalization value segment of the U.S. equity universe, and the Russell 1000 Growth Index, which represents the mid and large-capitalization growth segment of the U.S. equity universe.

How is the HTUS ETF's portfolio composition determined?

The HTUS ETF's portfolio is designed to match the Long Component and the Short Component of the underlying indices. It invests at least 80% of its net assets in securities that comprise the Long Component or shares of ETFs that track the Long Component. It may also use derivatives to obtain up to 70% exposure to the Long Component and all of the exposure to the Short Component.

What are the advantages of investing in the HTUS ETF?

Investing in the HTUS ETF allows investors to adopt a market-neutral strategy, which can potentially offer a hedge against market volatility. By combining long and short exposures, the fund aims to minimize the impact of overall market movements on its returns.

5 min read

By Beqa Bumbeishvili, ETF Insider

What is the HTUS ETF ?

In the ever-changing landscape of finance and investment, Exchange-Traded Funds (ETFs) have gained significant popularity among investors. They offer a diversified portfolio, flexibility, and liquidity, making them an attractive choice for both seasoned investors and newcomers alike. In this article, we will delve into the HTUS ETF, exploring its overview, underlying exposure, benefits, and considerations before investing.

HTUS ETF: Overview

The HTUS ETF, short for "Highland/iBoxx Senior Loan ETF," is an exchange-traded fund that aims to provide investment results corresponding to the price and yield performance of the Markit iBoxx® Liquid Leveraged Loan Index. Under normal circumstances, at least 80% of the fund's net assets are invested in securities and instruments issued by or economically tied to U.S. issuers. To achieve its investment objective, the fund's sub-adviser, HTAA, LLC, utilizes proprietary analytical investment models that analyze current and historical market data to predict the performance of the S&;P 500® Index, which mainly comprises large-capitalization U.S. issuers.

HTUS ETF Underlying and Exposure: What Does It Track and How?

The HTUS ETF is designed to track the Markit iBoxx® Liquid Leveraged Loan Index, which includes a diversified portfolio of senior loans made to corporate borrowers with below-investment-grade credit ratings. These senior loans are typically secured and have floating interest rates, which can help mitigate interest rate risk. The ETF aims to provide exposure to the leveraged loan market, which can offer potentially attractive yields and a source of diversification in an investment portfolio. The sub-adviser uses various strategies, including taking long or short positions in the S&;P 500®, using futures contracts, buying or selling put or call options on the S&;P 500® Index or S&;P 500®-related ETFs, and investing in leveraged or inverse ETFs, among other instruments, to manage the fund's exposure.

HTUS ETF: Benefits to Invest in this ETF

Investing in the HTUS ETF can offer several benefits to investors. Firstly, it provides exposure to the senior loan market, which can be an attractive asset class for those seeking potentially higher yields than traditional fixed-income investments. Additionally, the ETF's underlying strategy of using various instruments to manage exposure can offer flexibility and adaptability to changing market conditions. Moreover, the ETF's focus on U.S. issuers and its attempt to track the performance of the S&;P 500® can provide investors with a way to gain exposure to large-cap U.S. stocks while potentially mitigating some risks associated with direct equity investments.

HTUS ETF: Considerations Before Investing

While the HTUS ETF offers several benefits, it is essential for investors to consider certain factors before making an investment decision. Firstly, investing in the leveraged loan market involves credit risk, as the underlying loans are made to below-investment-grade borrowers. Additionally, the use of derivatives and other complex instruments in the ETF's strategy may introduce increased volatility and risk. As with any investment, investors should carefully assess their risk tolerance, investment goals, and time horizon before investing in the HTUS ETF or any other financial instrument.

Conclusion:

In conclusion, the HTUS ETF presents an opportunity for investors to gain exposure to the senior loan market and the performance of the S&;P 500®. It offers potential benefits in terms of diversification and flexibility, but it also comes with certain considerations and risks. As with any investment decision, it is crucial for investors to conduct thorough research, consider their financial goals, and consult with a qualified financial advisor. Remember, the information provided in this article is for informational purposes only and should not be construed as investment advice. Always conduct due diligence and make informed decisions based on your individual financial situation.

Disclaimer: This article is intended for informational purposes only and does not constitute investment advice. The author is not providing any investment advisory services. Always consult with a qualified financial advisor before making investment decisions.

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FAQ

What is the HTUS ETF?
The HTUS ETF, also known as the Strategy Shares Market Neutral ETF, is an exchange-traded fund that aims to provide investors with a market-neutral strategy by combining long exposure to the Russell 1000 Value Index with short exposure to the Russell 1000 Growth Index.
How does the HTUS ETF's market-neutral strategy work?
The HTUS ETF's market-neutral strategy involves holding 150% long exposure to the Russell 1000 Value Index (the "Long Component") and 50% short exposure to the Russell 1000 Growth Index (the "Short Component"). This combination allows investors to express a value over growth investment view.
What are the underlying indices that the HTUS ETF tracks?
The HTUS ETF tracks the performance of two underlying indices: the Russell 1000 Value Index, which represents the mid and large-capitalization value segment of the U.S. equity universe, and the Russell 1000 Growth Index, which represents the mid and large-capitalization growth segment of the U.S. equity universe.
How is the HTUS ETF's portfolio composition determined?
The HTUS ETF's portfolio is designed to match the Long Component and the Short Component of the underlying indices. It invests at least 80% of its net assets in securities that comprise the Long Component or shares of ETFs that track the Long Component. It may also use derivatives to obtain up to 70% exposure to the Long Component and all of the exposure to the Short Component.
What are the advantages of investing in the HTUS ETF?
Investing in the HTUS ETF allows investors to adopt a market-neutral strategy, which can potentially offer a hedge against market volatility. By combining long and short exposures, the fund aims to minimize the impact of overall market movements on its returns.

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