Calamos Announces S&P 500 Structured Alt Protection ETFTM - August (CPSA) 8.58% - 9.07% Upside Cap Range with 100% Downside Protection Over One Year
Calamos Investments announced the estimated upside cap range for its S&P 500 Structured Alt Protection ETF - August (CPSA), set to launch on August 1, 2024. The ETF offers 100% downside protection to the S&P 500 with an estimated upside cap range of 8.58%-9.07% over a one-year outcome period before fees and expenses.
CPSA is part of the Calamos Structured Protection ETFs™ series, which provides capital-protected growth strategies for major US equity benchmarks. The suite combines Calamos' alternatives and options investing expertise with the benefits of ETF structure, including liquidity, cost-effectiveness, and tax efficiency. With an annual expense ratio of 0.69%, CPSA offers potential tax advantages for holdings exceeding one year.
- 100% downside protection against S&P 500 losses over a one-year period
- Estimated upside cap range of 8.58%-9.07% before fees and expenses
- Tax-efficient structure with potential for long-term capital gains treatment
- Monthly entry points available for investors
- Combines alternatives expertise with ETF benefits (liquidity, cost-effectiveness)
- Upside potential capped at 8.58%-9.07%, limiting gains in strong bull markets
- Annual expense ratio of 0.69% may impact overall returns
- Protection and cap reset annually, requiring active management by investors
Insights
Calamos Investments LLC has announced the launch of its new ETF, the Calamos S&P 500 Structured Alt Protection ETF (CPSA), which promises an 8.58%-9.07% upside cap range over a one-year period while providing 100% downside protection. This structure is particularly interesting from a risk management perspective.
Firstly, the concept of offering full downside protection while still providing upside potential is compelling for conservative investors or those nearing retirement who seek to protect their capital. With market volatility being a constant concern, a product like this offers peace of mind while still allowing for some growth.
However, the upside cap range of 8.58%-9.07% could be considered modest, especially in a bull market scenario where the S&P 500 could potentially produce higher returns. It's important for investors to understand that if the market performs exceptionally well, their returns will be capped within this range. Therefore, while the downside protection is excellent for risk-averse investors, aggressive investors might find the capped returns limiting.
The expense ratio of 0.69% is also a factor to consider. Although this is reasonable for a structured product offering specialized features like downside protection, it is higher than the average expense ratio of traditional S&P 500 ETFs which typically range between 0.03% to 0.10%.
In terms of tax efficiency, the ETF structure means that gains can grow tax-deferred and may be taxed at long-term capital gains rates if held for more than one year, which is a significant advantage for long-term investors.
From an investment strategy standpoint, the introduction of the CPSA ETF by Calamos aligns well with the increasing demand for alternative investment strategies that offer both growth and protection. Given the current economic environment characterized by uncertainty and potential market downturns, products like CPSA can act as a hedge within a diversified portfolio.
The monthly entry points offered by the series add flexibility for advisors and investors to balance their portfolios over time. Capital-protected growth strategies are particularly useful in market conditions where investors expect moderate returns but are wary of significant losses.
Another noteworthy aspect is the involvement of experienced portfolio managers like Co-CIO Eli Pars and the Alternatives Team at Calamos. Their decades-long expertise in options and alternatives investing adds credibility and trustworthiness to the product, which is an essential factor for investors when considering new ETF offerings.
However, it is important for investors to weigh the potential benefits against the limitations posed by the upside cap. While the downside protection is attractive, the capped returns might not meet the expectations of those accustomed to higher risk-reward profiles. Therefore, this ETF is more suited for conservative or balanced investors rather than aggressive ones.
- CPSA is slated to launch August 1 with
8.58% -9.07% estimated upside cap range over a one-year outcome period. - The Calamos Structured Protection ETF™ suite combines Calamos' decades-long alternatives and options investing expertise with the liquid, cost-effective and tax-efficient ETF structure.
- Calamos Structured Protection ETFs offer investors the most comprehensive capital-protected suite across leading
U.S. equity indices (S&P 500®, Nasdaq-100® and Russell 2000®)
METRO
Calamos' Structured Protection ETF series is the most comprehensive of its kind, offering financial advisors and investors entry points each month to capital-protected growth strategies to the leading US equity benchmarks over one-year outcome periods. The suite is the logical product line extension of an asset manager that has been utilizing its options investing expertise in engineering alternative investment strategies with a focus on risk management for nearly 50 years, now provided with the simplicity, transparency, and tax efficiency of an ETF.
Calamos S&P 500® Structured Alt Protection ETF™ – August (CPSA) | |
Cap Range | Estimated |
Outcome Period | 1 Year: 8/01/2024 to 7/31/2025 |
Reference Asset | Price return of the SPDR® S&P 500® ETF Trust (SPY), based on the S&P 500® Index |
Structured Protection | |
Annual Expense Ratio | 0.69 % |
Portfolio Management | Co-CIO Eli Pars and the Alternatives Team |
Benchmarks | S&P 500® Index, Price Return MerQube Capital Protected US Large Cap Index – August |
Tax Application | Gains in an ETF grow tax-deferred and will be taxed at long-term capital gain rates if held longer than one year |
Structured Protection ETFs™ reset annually, offering investors a new upside cap with refreshed protection against negative returns of the benchmark over the subsequent 12-month period. If shares are held longer than one year, CPSA can deliver significant tax alpha as potential gains will grow tax-deferred at long-term capital gains rates and can be held indefinitely.
Learn more about the full suite of Calamos Structured Protection ETFsTM.
About Calamos
Calamos Investments is a diversified global investment firm offering innovative investment strategies, including alternatives, multi-asset, convertible, fixed income, private credit, equity, and sustainable equity. With
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An investment in the Fund(s) is subject to risks, and you could lose money on your investment in the Fund(s). There can be no assurance that the Fund(s) will achieve its investment objective. Your investment in the Fund(s) is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. The risks associated with an investment in the Fund(s) can increase during times of significant market volatility. The Fund(s) also has specific principal risks, which are described below. More detailed information regarding these risks can be found in the Fund's prospectus.
Investing involves risks. Loss of principal is possible. The Fund(s) face numerous market trading risks, including authorized participation concentration risk, cap change risk, capital protection risk, capped upside risk, cash holdings risk, clearing member default risk, correlation risk, derivatives risk, equity securities risk, investment timing risk, large-capitalization investing risk, liquidity risk, market maker risk, market risk, non-diversification risk, options risk, premium-discount risk, secondary market trading risk, sector risk, tax risk, trading issues risk, underlying ETF risk and valuation risk. For a detailed list of fund risks see the prospectus.
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The Fund(s) are designed to provide point-to-point exposure to the price return of the reference asset via a basket of Flex Options. As a result, the ETFs are not expected to move directly in line with the reference asset during the interim period. Investors purchasing shares after an outcome period has begun may experience very different results than fund's investment objective. Initial outcome periods are approximately 1-year beginning on the fund's inception date. Following the initial outcome period, each subsequent outcome period will begin on the first day of the month the fund was incepted. After the conclusion of an outcome period, another will begin.
FLEX Options Risk – The Fund(s) will utilize FLEX Options issued and guaranteed for settlement by the Options Clearing Corporation (OCC). In the unlikely event that the OCC becomes insolvent or is otherwise unable to meet its settlement obligations, the Fund(s) could suffer significant losses. Additionally, FLEX Options may be less liquid than standard options. In a less liquid market for the FLEX Options, the Fund(s) may have difficulty closing out certain FLEX Options positions at desired times and prices. The values of FLEX Options do not increase or decrease at the same rate as the reference asset and may vary due to factors other than the price of reference asset. Shares are bought and sold at market price, not net asset value (NAV), and are not individually redeemable from the fund. NAV represents the value of each share's portion of the fund's underlying assets and cash at the end of the trading day. Market price returns reflect the midpoint of the bid/ask spread as of the close of trading on the exchange where fund shares are listed.
Cap Rate – Maximum percentage return an investor can achieve from an investment in the Fund if held over the Outcome Period.
Cap Range – Cap ranges are based on the last 15 trading days prior to range announcement, based on market conditions during the sample period, and are subject to change. The actual cap rate may be different based on market events.
Protection Level – Amount of protection the Fund is designed to achieve over the Days Remaining.
Outcome Period – Number of days in the Outcome Period.
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SOURCE Calamos Investments
FAQ
What is the upside cap range for Calamos S&P 500 Structured Alt Protection ETF (CPSA) launching August 1, 2024?
How much downside protection does the Calamos S&P 500 Structured Alt Protection ETF (CPSA) offer?
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When does the outcome period for Calamos S&P 500 Structured Alt Protection ETF (CPSA) begin and end?
