For Active Portfolio Managers
The Shielded Alpha℠ structure is simply a wrapper that facilitates active portfolio management within an exchange-traded fund (ETF) rather than in a traditional actively managed mutual fund or separately managed account (SMA).
An ETF provides considerable advantages over a mutual fund, including lower cost, capital gains tax efficiency and intraday liquidity. But importantly, because of its novel Creation Basket structure, the Shielded Alpha℠ ETF wrapper fully obfuscates a fund advisor's alpha generation strategy and trade execution.
With the Shielded Alpha℠ ETF wrapper a fund advisor manages their active portfolio no differently than with a mutual fund or SMA - no changes to portfolio management are required. Manage the portfolio directly or use sub-advisers for some or all of the portfolio.
Enter and exit portfolio positions opportunistically or methodically and of course rebalance when required. An advisor's alpha generation strategy and trade execution is always obfuscated by the Shielded Alpha℠ ETF Creation Basket. This ETF wrapper cannot be reverse engineered, unlike structures whose disseminated verified intraday indicative value is calculated from actual portfolio holdings and weightings.
The investable universe for the Shielded Alpha℠ ETF wrapper currently consists of domestic small, mid and large cap equity securities, ETFs and ETNs, exchange-traded preferred stock, futures, commodity pools, metal trusts, currency trusts, real estate investment trusts and American Depositary Receipts (ADRs), cash and cash equivalents and foreign equity securities from markets that trade contemporaneously with the U.S., i.e. Canada, Mexico and Brazil. Note that Blue Tractor has filed with the SEC to expand the investable universe to include domestic and foreign fixed income securities, currencies, derivatives (including options) and international equity securities including Europe and Asia.
The Blue Tractor Wrapper Fully Obfuscates an Advisor's Alpha Generation Strategy
With a Shielded Alpha℠ ETF Creation Basket the market will know all of the names in an advisor's portfolio (hence, the high degree of transparency important for efficient pricing and trading). However, simply knowing all of the names in an ETF portfolio does not illuminate an advisor's alpha generation strategy (their secret sauce).
Why? Because portfolio alpha is not generated by what is held by the advisor today, but rather from the advisor's future trading strategy:
Additionally, an advisor can use tools in Blue Tractor's cloud-hosted Shielded Alpha℠ Service to further scramble the % weightings in the Creation Basket when initiating a new position or exiting from one, fully shielding any knowledge of all trade execution in the confidential ETF portfolio.
An ETF provides considerable advantages over a mutual fund, including lower cost, capital gains tax efficiency and intraday liquidity. But importantly, because of its novel Creation Basket structure, the Shielded Alpha℠ ETF wrapper fully obfuscates a fund advisor's alpha generation strategy and trade execution.
With the Shielded Alpha℠ ETF wrapper a fund advisor manages their active portfolio no differently than with a mutual fund or SMA - no changes to portfolio management are required. Manage the portfolio directly or use sub-advisers for some or all of the portfolio.
Enter and exit portfolio positions opportunistically or methodically and of course rebalance when required. An advisor's alpha generation strategy and trade execution is always obfuscated by the Shielded Alpha℠ ETF Creation Basket. This ETF wrapper cannot be reverse engineered, unlike structures whose disseminated verified intraday indicative value is calculated from actual portfolio holdings and weightings.
The investable universe for the Shielded Alpha℠ ETF wrapper currently consists of domestic small, mid and large cap equity securities, ETFs and ETNs, exchange-traded preferred stock, futures, commodity pools, metal trusts, currency trusts, real estate investment trusts and American Depositary Receipts (ADRs), cash and cash equivalents and foreign equity securities from markets that trade contemporaneously with the U.S., i.e. Canada, Mexico and Brazil. Note that Blue Tractor has filed with the SEC to expand the investable universe to include domestic and foreign fixed income securities, currencies, derivatives (including options) and international equity securities including Europe and Asia.
The Blue Tractor Wrapper Fully Obfuscates an Advisor's Alpha Generation Strategy
With a Shielded Alpha℠ ETF Creation Basket the market will know all of the names in an advisor's portfolio (hence, the high degree of transparency important for efficient pricing and trading). However, simply knowing all of the names in an ETF portfolio does not illuminate an advisor's alpha generation strategy (their secret sauce).
Why? Because portfolio alpha is not generated by what is held by the advisor today, but rather from the advisor's future trading strategy:
- What are the future portfolio target weightings (and reasons)
- What is the timing of future purchases and sales;
- How long will positions be held and what are the reasons they will be trimmed or exited; and
- If the ETF is benchmarked versus an index, are target positions under or overweight.
Additionally, an advisor can use tools in Blue Tractor's cloud-hosted Shielded Alpha℠ Service to further scramble the % weightings in the Creation Basket when initiating a new position or exiting from one, fully shielding any knowledge of all trade execution in the confidential ETF portfolio.
Albert Einstein famously said that "Information is Not Knowledge".
With the Shielded Alpha℠ ETF wrapper portfolio names are indeed information, but in of themselves are insufficient to determine an advisor's alpha program because the Creation Basket fully obfuscates knowledge of actual portfolio % holdings.
With the Shielded Alpha℠ ETF wrapper portfolio names are indeed information, but in of themselves are insufficient to determine an advisor's alpha program because the Creation Basket fully obfuscates knowledge of actual portfolio % holdings.