Bringing you live news and features since 2006 

Blue Tractor Group announces software release to support Shielded Alpha ETF structure


Blue Tractor Group (Blue Tractor) has announced the alpha release of software facilitating the operation of Blue Tractor’s Shielded Alpha exchange traded fund (ETF) structure. 

The Shielded Alpha ETF structure is highly transparent, disclosing to the market through the daily portfolio composition file (PCF) basket the names of a fund’s portfolio holdings, but importantly not the actual portfolio weightings, thereby fully obscuring the ETF’s investment strategy. The PCF basket will have a minimum 90 per cent asset value overlap with the fund’s actual portfolio weightings. As such, a Shielded Alpha ETF is not a non-transparent ETF. The US Securities and Exchange Commission (SEC) has yet to approve the Shielded Alpha ETF structure. 
The Blue Tractor software is a secure cloud-based service that will be accessed by investment advisors and custodians to algorithmically generate the PCF basket used by ETF market makers and authorised participants for high frequency intra-day pricing, bona fide arbitrage, hedging, and in-kind creations and redemptions with the ETF. For all intents and purposes, the PCF basket for a Shielded Alpha ETF will operate identically to the PCF basket used by existing ETFs.
“We are solving the challenge for investment advisors wishing to offer actively managed funds within an ETF structure but who are concerned that requisite daily full portfolio disclosure under current SEC rules for active ETFs is detrimental to their strategy,” says Terence (Terry) Norman, Founder of Blue Tractor. “Moreover, with the PCF basket having a minimum 90 per cent asset value transparency, a Shielded Alpha ETF arguably would be more transparent than some existing ETFs. We believe Blue Tractor’s proprietary approach to structuring an actively managed ETF without daily full portfolio disclosure is a responsible step in this category’s evolution.”
Cathryn Graham, Chief Technology Officer of Blue Tractor, said: “The current software release forms the foundation for the Shielded Alpha℠ ETF structure. Our development team has done an outstanding job bringing Blue Tractor’s vision to reality. Over the coming months as the software evolves into the beta release, we look forward to incorporating the feedback received from investment advisors and custodians.”
Blue Tractor will license the software to investment advisers who wish to bring to market their own Shielded Alpha ETFs. 

Latest News

Raymond James Investment Management plans to launch an ETF product platform in 2025 to support strong client demand in alignment..
Aniket Ullal, Director of ETF Data and Research at CFRA Research, has written a note looking at ETFs with exposure..
Tradeweb reports the following data derived from trading activity on the Tradeweb Markets institutional European- and US-listed ETF platforms...
iShares writes that its assets under management have reached USD4 trillion. The firm says this comes off the back of..

Related Articles

Scott Kefer, VictoryEx Capital Holdings
Bailey McCann writes that active ETFs are capturing investor interest, according to the latest data from Morningstar, which finds that...
Chris Lo, Columbia Threadneedle
In a recent insight on India by Columbia Threadneedle Investments, the firm reports that the country’s economic reforms, which aim...
With an election on the horizon in the United States a group of ETFs is poised to capture investments on...
Robot worker
Qraft Technologies, based in South Korea, specialises in the use of AI in security selection and portfolio construction....
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by