At the age of 72, and following a highly successful career as an entrepreneur and quantitative trader, one would expect Blair Hull to be enjoying the comforts of retirement. In 1985, Mr. Hull started what would become one of the most dominant and successful proprietary derivatives trading firms of its time.
Fourteen years later, he and his partners sold the firm, Hull Trading Company, to Goldman Sachs for more than $500 million. Now, Mr. Hull is looking to bring his prowess for building systematic trading strategies to the retail market through a new ETF: the Hull Tactical US ETF (ticker: HTUS).
Hull’s timing might be just right. With questions around equity market valuations and the direction of interest rates, investing in strategies that are designed to move independently of the market’s direction are gaining favor. The most well known of these strategies is managed futures, which typically invest both long and short in assets that have strong positive or negative trends, and thus can take advantage of sharp market moves.
And based on Morningstar’s most recent asset flows report, managed futures funds are the second most sought after liquid alternative category over the past year, having taken in $5 billion over the past 12 months through May.
While the new Hull ETF is not a managed futures product, it is constructed and managed in such a way that it is meant to generate long-term capital appreciation regardless of market direction – a very similar philosophy to managed futures strategies.
As an alternative ETF strategy, the Hull Tactical US ETF is intended to complement an existing portfolio. However, much like an entire diversified portfolio onto itself should be, the ETF is constructed to perform under all market conditions, and to achieve long-term capital appreciation with lower volatility than the equity markets.
Our goal for our investors is simple: to achieve long-term growth from investments in the U.S. equity and Treasury markets, independent of market direction.
Actively managed by Hull Tactical Asset Allocation, LLC (HTAA), the Hull Tactical US ETF’s investment strategy is guided by HTAA’s proprietary, patent-pending, quantitative trading model. The model evaluates multiple indicators that best predict the return of the S&P 500 Index over the next six months, and recalibrates those indicators every 20 days using 12 years of historical data.
Long, Short and Leverage
The ETF pursues its investment objectives by gaining long or short exposure to the S&P 500, which may include positions in S&P 500-related ETFs, S&P 500-related futures, and up to 10% of its total assets in leveraged or inverse ETFs related to the S&P 500 Index. The fund may use leverage, with long exposure of up to 200% of its net assets, but short positions may be no more than 100% of its net assets.
“Investing in the S&P 500 can be an uncertain game, but a disciplined and systematic approach can help you to outperform on a risk-adjusted basis,” said Blair Hull, the founder of HTAA, in a recent statement. “We want to provide investors access to hedge fund-like investing. Investors need a strategy to gain lower volatility exposure to the equity market, especially in today’s volatile environment, and we believe HTUS delivers just that.”
The fund was launched on June 24 and is designed to outperform a benchmark comprised of 60% stocks (S&P 500 Index) and 40% 3-month T-bills. The management fee on the fund is 0.91%, and the expense ratio is 1.00%.
For more information, visit the HTUS Fund Page.