The Recon Capital USA Managed Risk ETF is based on an Index that provides exposure to the broad U.S. market while seeking to reduce downside risk and capture meaningful gains in rising markets.
Stamford, CT — September 20, 2016— Recon Capital, an investment firm and exchange traded fund (ETF) providerbegan trading the Recon Capital USA Managed Risk ETF (NYSE:USMR) on the New York Stock Exchange ARCA today.
“Investors are concerned about low volatility, and smart beta, strategies due to crowding, factor, and rebalancing issues,” said Kevin Kelly, Portfolio Manager and Chief Investment Officer, Recon Capital Partners. “We believe this ETF provides investors with a fully-fledged portfolio management strategy that strives to consistently give the optimal allocation in order to seek to reduce risk around market moving events like government referendums or interest rate hikes. This involves dynamically rotating around stock, industry, and factor allocations, taking into account current market information while also rebalancing monthly to the dynamic and ever-changing markets. The objective of the ETF is to seek to provide the most optimal portfolio for risk-adjusted returns.”
The USA Managed Risk ETF takes the largest 900 companies in the U.S. and uses Axioma's state-of-the-art factor risk model and optimizer that seeks to pick the best risk adjusted stocks given the current market environment. The factor risk model strives to minimize risk in an effort to reduce the volatility of the underlying index. The ETF seeks a higher risk adjusted return relative to the broader U.S. equity market by managing all the systematic risk exposures such as value, growth, momentum, exchange-rate sensitivity, and liquity while still not being restricted to the holdings, sectors or factor constraints of the broader based US averages.
“By licensing the STOXX USA 900 Minimum Variance Unconstrained Index to Recon Capital Partners, market participants in the United States can potentially benefit from this innovative strategy that seeks low volatility and strives to reduce the risk of a portfolio and potentially can improve its long-term returns,” said Matteo Andreetto, chief executive officer, STOXX Limited. “The unconstrained version is a novelty as it provides a strategy index that strives for minimized volatility, but is not restricted to follow the underlying base index too closely.”
Importantly, the USMR ETF seeks not equate to a simple allocation to the low volatility factor but rather strives for a dynamic allocation to incorporate correlation risk. The resulting portfolio may reflect certain biases compared to a market capitalization weighted portfolio.
Recon Capital Partners, LLC is an SEC registered investment adviser headquartered in Stamford, Connecticut. Recon Capital provides investment solutions for institutional investors, financial professionals, and individual investors in a liquid, transparent, and cost effective manner.Recon deploys its strategies through several formats including its exchange traded fund platform.For more information, visithttp://www.reconfunds.comand www.reconcapitalpartners.com.
STOXX Ltd. is a global index provider, currently calculating a global, comprehensive index family of over 7,500 strictly rules-based and transparent indices. Best known for the leading European equity indices EURO STOXX 50, STOXX Europe 50 and STOXX Europe 600, STOXX Ltd. maintains and calculates the STOXX Global index family which consists of total market, broad and blue-chip indices for the regions Americas, Europe, Asia/Pacific and sub-regions Latin America and BRIC (Brazil, Russia, India and China) as well as global markets. STOXX is part of Deutsche Boerse Group, and markets the DAX indices. www.stoxx.com
The Recon Capital United States Managed Risk ETF seeks to provide investment results that will closely correspond, (before fees and expenses) generally to the performance of the STOXX® USA 900 Minimum Variance Unconstrained Index.
You should consider the fund’s investment objectives, risks, and charges and expenses carefully before investing. Contact Recon Capital Advisors at 1-844-RC-FUNDS/1-844-723-8637 or visit www.ReconFunds.com to obtain a prospectus which contains this and other information about the fund. The prospectus should be read carefully before investing. Shares are bought and sold at market price (not NAV), are not individually redeemable, and owners of the Shares may acquire those Shares from the Funds and tender those shares for redemption to the Funds in Creation Unit aggregations only, consisting of 50,000 Shares. Brokerage commissions will reduce returns. Index returns are for illustrative purposes only. Investors cannot directly invest in an index and unmanaged index returns do not reflect any management fees, transaction costs or expenses. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with investments in the Fund. Investing in the fund involves risk, including possible loss of principal. The Fund seeks to track the Underlying Index, which itself may have concentration in certain regions, economies, countries, markets, industries or sectors. The Fund may be susceptible to an increased risk or loss, including losses due to adverse events that affect the Fund’s investments more than the market as a whole, to the extent that the Fund’s investments are concentrated in the securities of a particular issuer or issuers, country, group of countries, region, market, industry, group of industries, sector, or asset class. Diversification may not protect against market risk or loss of principal. Brokerage commissions will reduce returns. The Fund is considered non-diversified and may be subject to greater risks than a diversified fund. Recon Capital Advisors, LLC is the Investment Adviser of the Fund. The Fund is distributed by Foreside Fund Services, LLC, which is not affiliated with Recon Capital Advisors, LLC or any of its affiliates.
Beta - a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole.
Correlation - measures the degree to which two securities move in relation to each other.
Sharpe Ratio – a measure for calculating risk-adjusted return. Generally, the greater the value of the Sharpe ratio, the more attractive the risk-adjusted return.
Standard Deviation - a measure of the dispersion of a set of data from its mean. If the data points are further from the mean, there is higher deviation within the data set. For example, a volatile stock has a high standard deviation.
Factor - A circumstance, fact, or influence that contributes to a result or outcome.
Crowding - A situation when increased investment in a particular sector, or attribute, of the market leads to a reduction in returns expected or achieved from that investment. The pricing of the assets and correlations increase as more people invest in that particular sector or attribute.