SWAN - SWAN: Hedged Equity Vehicle Looking Appealing
2024-06-11 03:39:39 ET
Summary
- The Amplify BlackSwan Growth & Treasury Core ETF aims to hedge investor returns during unexpected market dislocations.
- The fund is composed of long-dated S&P 500 options and a ladder of treasury bonds.
- The fund has performed well in 2024, being up over 6%, outperforming the iShares Core U.S. Aggregate Bond ETF and providing an embedded hedge.
- SWAN is again becoming a balanced vehicle that will benefit from a negative equity/bond correlation when the Fed starts lowering rates.
Thesis
Black swan events are rare occurrences, and they usually describe very out of the ordinary transgressions that result in significant market dislocations:
SWAN: Hedged Equity Vehicle Looking AppealingThe black swan theory or theory of black swan events is a metaphor that describes an event that comes as a surprise, has a major effect, and is often inappropriately rationalized after the fact with the benefit of hindsight. The term is based on a Latin expression which presumed that black swans did not exist. The expression was used until around 1697 when Dutch mariners saw them in Australia. After this, the term was reinterpreted to mean an unforeseen and consequential event.