Black swan investing using ETFs – The Globe and Mail

Last week, Horizons Exchange Traded Funds launched two Exchange Traded Funds based on Black Swan basics. Mr. Taleb serves as a distinguished scientific advisor for Universa, the managers of the two funds. The funds are designed to protect investors against Black Swan events that will impact the S&P 500 Index and the TSX 60 Index. The Horizons Universa Canadian Black Swan ETF HUT.A-T and the Horizons Universa U.S. Black Swan ETF will combine traditional exposure to equity indices with an actively-managed options strategy. Black Swan ETFs essentially consist of two components: exposure to broadly based equity indices and a pool of put and call options that utilize the Black Swan Protection Protocol. Mark Spiznagel, founder of Universa manages a fund using the protocol that saw a return in excess of 100% in 2008.

A word of caution: These Exchange Traded Funds are specialty funds that are expected to record long periods of little or no return. However, potential return is substantial if and when a Black Swan event occurs. Consider the ETFs as a form of long term investment portfolio insurance policy.

via Black swan investing using ETFs – The Globe and Mail.

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