Exchange Traded Concepts has filed paperwork with the SEC for a “Hull Tactical US ETF.” The Hull Tactical US ETF will be an actively managed Fund of Fund ETF that plans to seek long-term capital appreciation. The Fund will seek to achieve its investment objective by taking long and short positions in ETFs that seek to track the performance of the S&P 500, as well as leveraged ETFs or inverse ETFs that seek to deliver multiples, or the inverse, of the performance of the S&P 500, respectively (these funds are collectively referred to as “S&P 500-related ETFs”).
HTAA, LLC (“HTAA” or the “Investment Sub-Adviser”) utilizes a proprietary, analytical investment model that examines current and historical market data to attempt to predict the performance of the S&P 500. The model delivers daily investment signals that HTAA uses to make investment decisions for the Fund. Depending on the daily investment signal delivered by the model, HTAA will take certain long or short positions in S&P 500-related ETFs: 1) if the model indicates bull-market conditions, HTAA will take long positions; or 2) if the model indicates bear-market conditions, HTAA will take short positions. When the Fund takes long positions, it may maintain long exposure of up to 200%; exposure to short positions are limited to no more than 100%. HTAA adjusts the Fund’s long and short positions in the S&P 500-related ETFs when necessary to take into account new data from the model that reflects changing market conditions. Positions may be adjusted on a daily basis as the model predictions fluctuate. During periods when the Fund is not fully invested in ETFs, the Fund will invest in U.S. Treasury obligations. Such investments may be significant, depending on the daily investment signals delivered by the model.
To respond to certain market, economic, political or other conditions, the Fund may invest 100% of its assets, without limitation, in debt securities and money market instruments. The Fund may be invested in this manner for extended periods, depending on HTAA’s assessment of market conditions. Debt securities and money market instruments include shares of other mutual funds, commercial paper, certificates of deposit, bankers’ acceptances, U.S. government securities, repurchase agreements and bonds that are rated BBB or higher. To the extent that the Fund invests in money market mutual funds the Fund would bear its pro rata portion of each such money market fund’s advisory fees and