Texan tactical asset management
STF Management, a Texan asset manager, has launched its first two ETFs, providing tactical asset allocation. Both funds are actively managed.
- STF Tactical Growth ETF (TUG)
- STF Tactical Growth & Income ETF (TUGN)
Both funds wok the same way. They both try to beat the Nasdaq 100 over longer periods. They try to do this using a proprietary quantitative model to swap between the Nasdaq 100, US treasuries and cash. The model looks at various market signals like volatility, correlations, and the prices of various assets. It then buys whatever assets it thinks are likely to best in whatever market conditions.
The only difference between the TUG and TUGN is that TUGN has an options overlay. It sells call options on holdings to try and generate further income.
TUG has received $160M in seed funding, suggesting a keystone client.
Both funds charge 0.65%.
Bernie’s commentary- funny ticker
I don’t want to sound too critical here but from what I can tell, these ETFs essentially try and do the old-fashioned thing of harvesting alpha by timing the market. They swap between assets, based on a model and attempt to beat everyone else to changes in asset prices. While this has worked for Renaissance Technology over the years – with its supercomputer and team of geniuses – everyone else has gotten burned.
The other question – again being a bit critical – I have is why can’t investors just do this themselves? Why can’t they just buy a Nasdaq 100, US treasury and cash ETF based on their own readings of the market? Or why can’t they just turn to model managers?
The final point I’d raise is about the tickers. TUG and TUGN – sounds like tugging. British English and American English are clearly still separated by a common language.