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Blue Sky launches new suite of ETFs under the QuantX brand


Asset manager Blue Sky Asset Management has launched a new suite of ETFs under the QuantX brand. The five ETFs in the QuantX family, all listed on BATS, incorporate various proprietary strategies from the Blue Sky team, developed over the past several years and previously only available to investors in a separate account wrapper.

“Working with advisors has given us a clear window into the challenges they face in building complete portfolios while also mitigating the volatility and downside risk that can so easily wreak havoc on the best laid asset allocation plans,” says Keys Tinney, Founder and Managing Partner of Blue Sky Asset Management.

“Investors don’t have an infinite time horizon, which is one of the main reasons we find traditional modern portfolio theory-based approaches to be sub-optimal,” says David Varadi, a Partner and Director of Research at Blue Sky.

“Our dynamic, quantitative approach provides for a more rapid response to changing markets, while filtering out the emotions that can have a negative impact on decision-making.  We have built this intellectual property into the indexes underlying the QuantX ETFs.”

The five funds launching today fall into two distinct categories: Dynamic Beta where Blue Sky seeks to create smarter risk exposures relative to a major benchmark, generating an asymmetric risk profile. The QuantX Dynamic Beta US Equity ETF (XUSA) is designed to create smarter risk exposure relative to the FTSE/Russell 1000 Index. This fund and its underlying index use options market data to identify a basket of large cap US equities with the highest upside volatility relative to their downside volatility.

“With XUSA, investors are able to capture key asymmetries in the US equity market, by identifying opportunities for upside participation and lowering downside risk,” says Varadi.

The second category is Risk-Managed. With these funds, Blue Sky uses their approach to Dynamic Asset Allocation to provide exposures to key asset classes, while also optimising cash and fixed income holdings in an attempt to manage downside risk. The underlying indexes are monitored daily and updated as indicated by Blue Sky’s methodology, based on the identification of elevated risks across various exposures. The funds and their underlying indexes have the ability to move the portfolios entirely to cash or fixed income instruments in an attempt to mitigate downside risk.
•        QuantX Risk Managed Multi-Asset Income ETF (QXMI): identifies top-performing fixed income and equity ETFs in attempting to maximize income and capital growth; cash and fixed income instruments can also be used in an effort to provide downside protection during times of market stress.
•        QuantX Risk Managed Growth ETF (QXGG): identifies top-performing domestic and international equity ETFs in an attempt to maximize capital growth, while cash and fixed income instruments are managed in an effort to provide downside protection during times of market stress.
•        QuantX Risk Managed Real Return ETF (QXRR): captures exposure to real returns by investing in inflation-sensitive assets while seeking downside protection.
•        QuantX Risk Managed Total Return ETF (QXTR): seeks to provide higher levels of total return from the best-performing asset classes with downside protection.

“While there are other ‘risk-managed’ approaches already on the ETF market, they tend to operate with a long delay, managing risks after they have already started to have a negative impact on a portfolio,” says Tinney. “Our approach is truly dynamic. With volatility an ever present risk for investors of all types, we believe it’s time for smarter beta solutions, and we’re very excited to be bringing the QuantX ETF family to market.”

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