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EventShares launches multi-factor actively managed ETFs


EventShares has launched what it calls the first family of actively managed ETFs designed to give investors exposure to major multi-factor political, economic, and policy-driven events and themes.

The two flagship ETFs – the EventShares Republican Policies Fund (BATS: GOP) and the EventShares Democratic Policies Fund (BATS: DEMS) – seek to construct portfolios expected to be positively affected by each respective party’s policies. Both seek to provide capital appreciation by unlocking value from policy-driven events and themes. Neither fund seeks to replicate the performance of a specific index.

“As we have seen in dramatic fashion since last year’s US presidential election, government policies can have a significant impact on the markets in both the short and the longer-term,” says Ben Phillips, Chief Investment Officer at EventShares. “Our funds are the first to provide a broad-based vehicle for investing in these themes as embodied by the policies of the two major American political parties, which often have divergent views on healthcare, infrastructure, and defense, among other areas.  Our research looks to identify winners and losers on a company-level, based on specific policy outcomes, and to build portfolios accordingly.”

The EventShares research process includes both a qualitative component that reviews current and prospective policy initiatives and their potential impact on specific sectors and stocks, and a quantitative process that screens for a set of proprietary metrics used to define the investable universe and manage portfolio risk. Based on this process, positions in the funds’ portfolio holdings are re-positioned quarterly. 

In addition to GOP and DEMS, EventShares is also launching a new tactical fund, the EventShares US Tax Reform Fund (TAXR).  TAXR seeks to provide exposure to those companies that are poised to see the greatest benefit from the implementation of significant tax reform in the US.  The company says it may introduce additional tactical ETFs going forward and cites past examples of tactical situations around which an EventShares fund might have been constructed, including the Dodd-Frank legislation, Obamacare, Quantitative Easing, and Abenomics.

All EventShares funds may invest in both equity and debt securities, without geographic limits. The funds have the ability to combine asset classes and market exposures opportunistically, managed based on policy-driven events and themes. In addition, the funds may hold both ‘short’ and ‘long’ positions in securities the manager believes will be impacted by specific policies and political events. The funds will generally hold 30-75 positions in the portfolio and be equally weighted.

“ETFs provide a great vehicle for investors who may want transparent, low-cost exposure to the potential impact of specific policies,” says Phillips.  “Adding the active component allows us to manage the funds dynamically, in keeping with constantly changing fortunes of the political parties, and rapidly evolving global events.”

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