![]() ![]() This is not an investment vehicle for the faint of heart. As the portfolio ramps up, the volatility will subside a bit more but expect a lot of vol here. We can see the vehicle down almost -20% during the November market rally, only to be up more than 30% at the end of December as Tesla collapsed. Since inception, the fund is up more than 13%, but it has not been a linear move. On the flip side, if the portfolio manager is wrong in terms of market views, the losses can be as spectacular. ![]() The long/short strategy would have been up on both legs, thus mathematically being able to generate 100%/200% types of returns during calendar years. Think about this strategy for a second - if this ETF had been created at the beginning of 2022 it would have had an absolute monster year! Energy was up significantly in 2022, while technology was down. The current set-up for the fund is to be long energy/miners and short some sub-sectors of tech (mainly Tesla at the moment). These types of strategies can be extremely profitable, but they can also be volatile. Noble, correctly identifies market trends and sectoral shifts. George Noble's view of the world and his investment acumen:Ī long/short equity hedge fund performs as long as the main alpha generator, i.e. Ultimately, a retail investor needs to understand that you are buying into Mr. NOPE aims to provide a positive return year in and year out, but it is most certainly not a guaranteed return. It is not that easy, though, when you see your investment portfolio down -20% during certain calendar years. There are many market practitioners who basically tell you that over the long run, equities provide xyz annualized total returns, and you need to be patient during a bear market. Money is what pays bills, and the utility company or the cell phone provider will not care if there is a bear market in terms of collecting what is due from you. ![]() It makes sense at the end of the day to entrust your earnings to a vehicle that will try to post positive returns every year, irrespective of a bull or bear market. We like this fund because it goes for an absolute return strategy:īasically, an absolute return strategy aims to make money year in, year out. For NOPE, this translates into being long the energy/miners space, while short technology (mainly Tesla at the moment). This strategy identifies and takes long positions in stocks identified as being relatively underpriced while selling short stocks that are deemed to be overpriced. ![]() For example, if the Fund's long holdings totaled 60% and its short holdings totaled 40%, the Fund's net exposure would be 20% (60%-40%).Ī long-short equity strategy works by trying to take advantage of profit opportunities in both potential upside and downside moves expected in different securities/sectors in the market. The Fund's net exposure at any time is the total of the Fund's percentage long holdings (including leverage) less the percentage of its short holdings. When the value of the Fund's outstanding short positions is equal to the Fund's net assets, the Fund is 100% short. The Fund will generally have net exposure ranging from 100% short to 150% long. The Fund is an actively-managed exchange-traded fund ("ETF") that seeks to achieve its investment objective by purchasing long positions in securities expected to increase in price and/or taking short positions in securities expected to decline in price. The actively managed exchange traded fund was launched at the end of September 2022. Noble Absolute Return ETF ( NYSEARCA: NOPE) is a welcome addition to the exchange listed investment universe. Metamorworks/iStock via Getty Images Thesis ![]()
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