Factor Advisors, a New York-based asset management firm, announced today the launch of FactorShares, the first family of spread exchange traded funds (ETFs) that allow sophisticated investors to simultaneously hold both a bull and a bear position in one leveraged ETF. These innovative, first-to-market products begin trading today on the NYSE Arca.
Designed to simplify spread trading and lower its cost barriers, the new FactorShares ETFs will enable investors to track two market segments, one long and one short, in a single ETF position. The initial five FactorShares ETFs pair up major asset classes from among the S&P 500 Index, US Treasury Bonds, Gold, Oil and the US Dollar.
“As a portfolio manager, I used to become frustrated about being charged twice the transaction fees and double the margin requirements in order to implement spread trades,” explained Stuart Rosenthal, CEO and Co-Founder of Factor Advisors. “I was determined to bring greater efficiency to spread trading. With the creation of FactorShares, spread trading among the major asset classes requiring two separate positions and indiscriminate rebalancing is in the past.”
The initial suite of FactorShares spread ETFs are designed to rebalance daily to achieve the desired effect of maintaining dollar neutrality. FactorShares ETFs are also capital efficient, targeting a daily leverage ratio of 4:1, where each dollar invested provides approximately two dollars of long futures exposure and two dollars of short futures exposure, immediately after daily rebalancing. FactorShares ETFs seek investment results for a single day only, not for longer periods.
In 2009, Rosenthal teamed up with investment banker and entrepreneur Karlheinz Muhr and UCLA Anderson School of Management’s award-winning Professor of Finance, Dr. Richard Roll, to found Factor Advisors. The three men believed that Dr. Roll’s risk factor-based investment approach could be the basis for creating simple and cost-effective spread ETFs and by this shared viewpoint FactorShares products were created.
“The innovation behind FactorShares is another industry milestone for transforming alternative investment strategies into accessible, transparent ETF products” said Muhr, Chairman of Factor Advisors. “The introduction of these ETFs is Factor Advisors’ first step in our commitment to building a comprehensive suite of factor-based products that will advance the way the marketplace approaches alternative investing.”
The first five FactorShares ETFs available today on the NYSE Arca include:
- FSE: FactorShares 2X: S&P500 Bull/TBond Bear
- FSA: FactorShares 2X: TBond Bull/S&P500 Bear
- FSU: FactorShares 2X: S&P500 Bull/USD Bear
- FOL: FactorShares 2X: Oil Bull/S&P500 Bear
- FSG: FactorShares 2X: Gold Bull/S&P500 Bear
Factor Advisors has also entered into a marketing agreement with Interactive Brokers, a global low-cost leader in electronic trading, to offer its brokerage clients commission-free trading of FactorShares ETFs with no minimum holding period and no short-term trading fees.
FactorShares ETFs may not be suitable for all investors and are intended for sophisticated investors who: i) understand leverage risk; ii) understand the consequences of seeking daily leveraged investment results; and iii) intend to actively monitor and manage their investments.
To learn more about Factor Advisors and their first family of spread ETFs, please visit www.factorshares.com.
About Factor Advisors
Factor Advisors, LLC (“Factor”) is a New York-based asset management firm dedicated to improving the way investors accomplish spread trading strategies. Factor’s flagship offering, FactorShares™, is the first family of spread exchange traded funds (ETFs). With one simple trade, each FactorShares ETF enables investors to track two market segments, one long and one short, in one convenient and cost-effective position. Factor has partnered with several premier organizations in order to develop and offer FactorShares including Interactive Brokers, Standard & Poor’s and State Street Bank.
There are risks associated with investing including possible loss of principal. Investments in FactorShares ETFs (the “Funds”) are speculative and involve a high degree of risk. Futures trading is volatile and even a small movement in market prices could cause large losses. The risks associated with FactorShares ETFs (the “Funds”) include and are not limited to: volatility risk, compounding effect risk, portfolio turnover risk, leverage risk, shorting risk, tracking error risk, commodity risk, futures risk and risks related to exchange traded funds. For specific risks regarding each Fund, please read the prospectus.
An investor should consider the investment objectives, risks, charges and expenses of FactorShares carefully before investing. The prospectus contains this and other information. Please read it carefully before investing any money. For more information or to receive a prospectus call 888.628.3180 or visit www.factorshares.com.
Each Fund is a commodity pool as defined in the Commodity Exchange Act and is subject to the applicable regulations of the Commodities Futures Trading Commission (CFTC). Factor Capital Management, LLC, a wholly owned subsidiary of Factor Advisors, LLC, is the Managing Owner of the Funds, is registered as a Commodity Pool Operator with the CFTC and is a member of the National Futures Association.
Each Fund seeks to track, before fees and expenses, approximately +200% or –200% of the daily return of an S&P Factor Index. An S&P Factor Index measures the spread, or the difference in daily return, between a long futures contract and a short futures contract, plus interest income. There is no guarantee that any Fund will meet its daily investment objective.
The Funds have no operating history. A potential investor has no performance history to serve as a factor for evaluating an investment in a Fund. There can be no assurance that a Fund will achieve profits or avoid losses, significant or otherwise.
Interactive Brokers LLC ("Interactive Brokers") receives compensation from the Managing Owner in connection with a marketing agreement that includes promotion of FactorShares ETFs and certain commission waivers. Additional information about the sources, amounts, and terms of compensation is described in the prospectus and related documents. Interactive Brokers may add or waive commissions on FactorShares ETFs without prior notice. An affiliate of Interactive Brokers is a member of Factor Advisors, LLC. For more information about the promotion, please visit www.interactivebrokers.com
A long position involves buying a security or financial instrument such as a stock, commodity or currency, with the expectation that the asset will rise in value. Shorting securities occurs when investors sell securities or financial instruments they don’t own and are committed to repurchasing eventually. Futures are standardized, transferable, exchange traded contracts that require delivery of a commodity, bond, currency, or stock index, at a specified price, on a specified future date.
The S&P 500® mark is a registered service mark owned by Standard and Poor’s Financial Services LLC. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and have been licensed for use by the Managing Owner. The Funds are not sponsored, endorsed, sold or promoted by S&P or its affiliates, and S&P and its affiliates make no representation, warranty or condition regarding the advisability of buying, selling or holding shares in a Fund. All other trademarks, service marks or registered trademarks are the property of their respective owners.
FactorShares™, Factor™ and spread ETF™ are service marks owned by Factor Advisors, LLC for which federal service mark registration applications are currently pending before the U.S. Patent and Trademark Office.
The Funds are not mutual funds or any other type of investment company within the meaning of the Investment Company Act of 1940, as amended, and are not subject to regulation thereunder.
Foreside Fund Services, LLC is the distributor of the Funds.