Tag Archives: Horizons Universa

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.

Horizons Universa US Black Swan ETF (HUS.U)

If there’s an investment-savvy reader out there who cares to have a look at and comment on this ETF for us that would be great. Doesn’t an “actively managed basket of put and call options” imply a steady drain on the fund unless and until there is a ‘Black Swan’ event?

The protection strategy

Universa’s proprietary Black Swan Protection Protocol (BSPP) uses an actively managed basket of put and call options that aims to protect the equity index exposure from Black Swan events. The BSPP should generate positive returns during sudden significant market declines. Gains generated from the BSPP are invested into the equity index exposure when it is historically less expensive, giving investors a potential “buy-low” advantage and the future compound growth that comes with it.

via Horizons Universa US Black Swan ETF (HUS.U).
HatTip to Trevor.