Democratizing Options: Business Veterans Launch New Hedge-Fund Model ETF

Emles Advisors this week launched an ETF based on a long-short hedge fund-style strategy that focuses on sectors such as industrials, consumer discretionary and basic materials.

Managed by Nathan Miller, a former portfolio manager for NGM Asset Management, Citadel Investment Group and RBC Capital, the actively managed fund – Emles Alpha Opportunities ETF – is the seventh ETF launched by Emles since its inception Established in October last year. The new fund is the second ETF based on alternatives and follows the launch of its Protective Allocation fund.

“A hedge fund-like product and a publicly available ETF is the best of both worlds,” said Miller. Founded by veterans Gabriel Hammond and Dave Saxena, who worked together on Hammond’s previous venture, Alerian Capital, Emles was built on the premise of offering nontraditional investments that would suit both institutional and retail investors. “As a hedge fund, you basically can’t go to private investors at all,” Miller said. “We run a hedge fund-like product with the aim of outperforming the market during the cycle. This is not a product that you will find in ETF form – [where] There is better liquidity, better tax structures for investors and transparency. “

The idea of ​​”democratizing” alternatives is an area of ​​growing interest for asset managers who want to bring their products to a wider audience beyond institutions. Private equity giant earlier this year KKR invests in iCapital Network To enable private investors to access private markets. Blackstone invested in the fintech platform two years earlier; it now offers products for retail investors in real estate, credit and hedge funds; the segment is accounted for eight percent of private equity under management early last year.

Despite the demand, according to a. only about five percent of US retail capital is used for alternative investments May 2020 report from BCG.
But the market is ripe for opportunities. Global financial wealth reached a record $ 250 trillion last year despite the economic uncertainties caused by the pandemic BCG report was released this week. The report also argued that an important opportunity for asset managers is to offer retail investors mutual funds and alternatives such as private equity and hedge funds, including what is known as the simple-needs segment, or the wealthy masses. These investments have long been out of the reach of individuals.

“This is the natural development for the MLP [master limited partnership] Marketplace and as the hedge fund marketplace evolves, ”said Hammond. “The biggest challenge is on the structuring side. Since these products have never been made before because Market Makers, APs, do not process these products, there is a lot of innovation when it comes to regulatory, execution and other issues. “We think that everything is like this” We will move with the times and we want to be ahead of the game. ”

Hammond and Miller, who invested $ 60 million in the new product, started the company as an ETF platform.

“This is another example of how we put our money where our mouth is,” said Hammond. “We have seen niches in the market and if there is a product or asset class or strategy that we find attractive and we want to find the right structure for us, we believe that both institutional and private companies will have an appetite.”

Amplify to launch clear residing ETF, DTOX, monitoring setting and well being

The enthusiasm for clean living doesn’t stop with Corporate America.

The trend has now impacted the exchange-traded fund market on which Amplify ETFs – the company behind popular themed funds like the one Boost the Seymour Cannabis ETF (CNBS) and the Strengthen the ETF for the exchange of transformation data (BLOK) – has now applied for an ETF focused on clean living.

If the index-based fund is approved, it will be launched later this year under the ticker DTOX, Amplify founder and CEO Christian Magoon told CNBC’s “ETF Edge” in this week.

DTOX will “track buildings and infrastructure, health, beauty, food, hospitality, energy and transportation companies that make products that are either better for the environment or better for the human body,” Magoon said in an interview Monday .

It sounds broad-based, but Amplify has proposed fairly strict rules for its holdings.

“They must have about 80% of their sales in these rooms,” said Magoon.

“It’s really one way of capitalizing on this trend that people want to be cleaner in terms of their footprint, health and environment,” he said. “We believe this is a trend that will continue for a while. We believe that companies that focus on it and get most of their revenue from it have a chance to produce alpha.”

While there are clean energy, health and wellness ETFs, DTOX would be the first to reflect both themes.

Psychedelics ETF to Launch After Sector Attracts Thiel’s Cash

(Bloomberg) – The world’s first publicly traded fund for psychedelics companies is set to debut in Toronto this week as the investment industry seeks to capitalize on rising interest in potential psychiatric treatments with the drugs.

The Horizons Psychedelic Stock Index ETF, which is listed as PSYK, is expected to trade on the NEO Exchange on Wednesday, the operator said. The fund tracks the North American Psychedelics Index.

Companies working with drugs containing compounds like psilocybin, the substance in magic mushrooms that causes psychedelic effects, are multiplying. Some early-stage investors are betting that the drugs could disrupt the $ 70 billion market for mental health treatments. The wave of craze for cannabis stocks in recent years has in some ways extended to these drugs, which have long been associated with nightly rave parties.

Stocks of companies like MindMed Inc. and Peter Thiel-backed Compass Pathways Plc have risen in recent months. MindMed has grown more than tenfold since its first day of trading in Canada in March and has a market value of $ 1.4 billion ($ 1.1 billion). The New York-based company recently announced that it has raised approximately $ 237.2 million since its inception.

Compass’ US-listed shares are up roughly 165% since it went public in September, increasing their market value to $ 1.6 billion. Jason Camm, Thiel Capital’s chief medical officer, is on the board.

The North American Psychedelics Index compiled by Solactive AG fell 2.7% on Tuesday after five consecutive days of gains from 12:45 p.m. New York time. It’s up about 14% since it started trading on Jan. 18.

Cannabis comparison

Steve Hawkins, chief executive of ETF operator Horizons ETFs Management Canada Inc., said it was time to offer the new investment option as more psychedelic companies go public. He said the company had received more inquiries about the psychedelics ETF on its website than it did for its first marijuana ETF, which launched as HMMJ in 2017.

The story goes on

This marijuana fund was on a wild ride. After debuting at C $ 10 per unit, the euphoria over Canada’s legalization of cannabis rose to over C $ 26 and fell below C $ 5 last year. This month it rose again above the IPO price.

Read more: Psychedelic Stock ETF might be less trippy than it sounds

To be included in PSYK, companies must maintain a market capitalization of at least $ 25 million, a stock price of $ 0.10, and an average daily trading value of $ 125,000, Hawkins said. Revive Therapeutics Ltd., Mind Cure Health Inc., and Mydecine Innovations Group Inc. are among the companies claiming to be included in PSYK.

Kevin O’Leary, an early investor in MindMed, chairman of O’Shares Investments and unrelated to Horizons, said the psychedelics sector needs to be indexed because it is too risky for institutional investors to focus on just one company or drug study Set early stage. O’Leary, who also owns shares in Compass, said he was looking for companies that would run multiple trials and attract capital.

O’Leary and other investors in the industry rub against the comparisons between psychedelics and cannabis, emphasizing that they are trying to expand mental health therapies and research rather than focusing immediately on selling recreational products.

Read more: Psychedelic therapy schools are a new trend in mental health

“We couldn’t be further from what the cannabis industry has become,” said JR Rahn, Co-CEO of MindMed. Psychedelics are a new asset class, said Rahn, supporting the urgent need for new and innovative treatments for mental health. He said he expects drug companies to partner in this sector.

In 2019, the U.S. Food and Drug Administration gave the go-ahead for the prescription nasal spray Spravato from Johnson & Johnson, a close chemical relative of the anesthetic ketamine, which works quickly against symptoms of depression.

(Updates with additional information on Thiel’s involvement, market prices on Tuesday.)

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