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Swan Global Investments HEGD ETF celebrates asset growth


Swan Global Investments, a specialised asset management firm with a 24+ year track record in hedged equity solutions, has announced that the Swan Hedged Equity US Large Cap ETF has raised USD115 million in just over nine months.

The firm writes that this demonstrates investors’ focus on market risk in their portfolios. Swan’s HEGD seeks long-term capital appreciation while mitigating overall market risk. HEGD is built upon Swan’s ‘Always Invested, Always Hedged’ process launched in 1997—a distinct blend of passive investing and active risk management in one ETF.

“The popularity and rapid growth of HEGD reflect rising unease from investors around market volatility, leading them to seek risk mitigation,” says Randy Swan, Founder and Lead Portfolio Manager of Swan Global Investments. “In a world of increasing uncertainty, investors and financial advisors need to take deliberate steps to temper the impact of volatility, government policy changes, and potential inflation. Hedged equity, particularly through the ETF marketplace, allows investors to easily take precautionary action.”

The firm writes that given the challenges to both equities and fixed income, options-based strategies have become increasingly popular with advisors and investors alike, making it one of the most rapidly growing ETF categories. In terms of assets under management and number of products available, options-based strategies have experienced soaring growth over the last several years—rising from 23 funds and USD10 billion in AUM in 2010 to 230 funds and USD48 billion in AUM in 2020, according to Morningstar, the firm says. 

The S&P 500 Index, one of HEGD’s benchmarks, has rallied 100 per cent from its Covid-19 pandemic trough of 2,237.40 on March 23, 2020, on a closing basis- the fastest bull market doubling off a bottom since World War II, the firm writes. 

“Investors are acutely aware of a potential market shift, increasing their appetite for hedged equity solutions. They are taking a cautious pause to re-evaluate market risks that have been building since the start of Covid-19. HEGD is an attractive option because it allows investors to stay invested while managing these risks,” says Jamie Atkinson, Head of Global Sales for Swan Global Investments.

Investors are seeking remedies for risks in the fixed income markets. “Due to paltry yields, credit risks, and the dismal to bleak outlook for fixed income, many advisers realise that the traditional 60/40 asset mix will have a difficult time generating the returns that clients need to fund their financial security objectives. Consequently, they are using hedged equity as a fixed-income replacement in their portfolio constructions for clients,” says Gib Watson, Chief Strategy Officer for Swan Global Investments.

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