PEO Partners and AlphaQuest Launch Actively Managed ETF –- PEO AlphaQuest™ Thematic PE ETF (Ticker: LQPE)

Rhea-AI Summary

PEO Partners and AlphaQuest have launched the PEO AlphaQuest™ Thematic PE ETF (LQPE), an actively managed ETF combining equity and derivatives strategies. The fund aims to mirror private equity investment themes while offering public market liquidity.

The ETF employs a dual strategy: an equity component focusing on public companies aligned with traditional private equity investment themes, and a derivatives component that provides increased market exposure and aims to reduce downside volatility. The fund targets excess or comparable returns versus the Russell 2500® Index with lower volatility.

LQPE is managed by Tidal Financial Group as the investment advisor, with PEO and AlphaQuest serving as sub-advisors. The ETF is available through major trading platforms including TD Ameritrade, Betterment, Charles Schwab, E Trade, Fidelity Investments, Robinhood, and Vanguard.

Positive

• Launch of new ETF product providing exposure to private equity themes with public market liquidity
• Dual strategy approach combining equity and derivatives for potential enhanced returns
• Wide distribution network through major trading platforms
• Active management structure with experienced advisors

Negative

• None.

Insights

ETF Market Analyst

The launch of LQPE marks a noteworthy evolution in democratizing private equity-style investing through a novel ETF structure. This product addresses several key market demands:

• Provides retail investors access to PE-like strategies without the traditional barriers of high minimums, lockup periods and accreditation requirements
• Offers a sophisticated dual strategy combining thematic equity selection with derivatives-based leverage and hedging - a structure rarely seen in retail-accessible products
• Delivers potential downside protection through AlphaQuest's trend-based hedging program, particularly valuable in today's uncertain market environment

The broad distribution through major platforms like Fidelity, Charles Schwab and Vanguard suggests significant market potential. The benchmark-agnostic approach, using the Russell 2500® as a reference rather than a strict benchmark, allows for greater flexibility in pursuit of returns.

However, investors should note several considerations: 1) The complexity of combining equity and derivatives strategies may make performance attribution and risk assessment more challenging 2) The use of futures for leverage, while common in PE, introduces additional risk factors 3) The success will heavily depend on the coordination between PEO's equity selection and AlphaQuest's derivatives management.

The timing of this launch aligns with growing investor interest in alternative strategies and the continued evolution of ETF products. The partnership structure, combining PEO's PE expertise with AlphaQuest's derivatives capabilities, creates a unique value proposition in the increasingly crowded liquid alternatives space.

Employs Equity and Derivatives Strategies That Incorporate Major Investment Themes of Traditional Private Equity Funds

Highly Diversified Portfolio Looking to Deliver Long-Term Capital Appreciation While Seeking to Preserve Capital During Significant Market Downturns

Tidal Financial Group Serves as the ETF’s Investment Adviser; PEO and AlphaQuest are Sub-Advisers

NEW YORK--(BUSINESS WIRE)-- PEO Partners, LLC (“PEO”), a private equity liquid alternatives platform, and AlphaQuest LLC (“AlphaQuest”), a research-driven, alternative asset management firm, today announced the launch of PEO AlphaQuest™ Thematic PE ETF (Ticker: LQPE), an actively managed ETF that combines equity and derivatives strategies. The equity strategy focuses on public companies that align with certain investment themes and characteristics of traditional private equity funds focused on leveraged buyouts (“PE funds”). The derivatives strategies, through the trading of futures contracts, involve providing increased equity market exposure that private equity funds typically achieve using leverage, as well as a distinctive investment strategy seeking to reduce downside volatility.

Together, the equity and derivatives strategies seek to deliver excess or comparable returns, with lower volatility, compared to public equity markets, represented by the Russell 2500^® Index.¹

Tidal Financial Group (“Tidal”) will serve as the ETF’s investment advisor, and PEO and AlphaQuest will serve as the sub-advisors. PEO will be responsible for the day-to-day management of the equity strategy and AlphaQuest will be responsible for the day-to-day management of the derivatives strategies.

“We are excited to partner with AlphaQuest and Tidal to bring to the market a truly innovative investment strategy that is benchmark-agnostic since the portfolio’s investment themes are anchored around private equity,” said Randy Cohen, Co-Founder of PEO. “We believe the strategy will deliver a distinctive investment performance with the potential for long-term capital appreciation, but manageable drawdowns during market upheavals.”

“We look forward to complementing PEO’s equity strategy by dually deploying our trend-based hedging program that seeks to reduce downside volatility of performance compared to public markets, as well as trading instruments that increase equity exposure, which private equity funds typically achieve through traditional leverage,” said Nigol Koulajian, Founder and CIO of AlphaQuest.

Gavin Filmore, CRO of Tidal, said, “LQPE offers investors a compelling opportunity to access a portfolio that emulates investment themes typical of private equity funds. We look forward to partnering with PEO and AlphaQuest, whose state-of-the-art investment platforms together form the ideal foundation for this highly innovative offering.”

LQPE is available through various channels including, broker-dealers, investment advisers, and other financial services firms including TD Ameritrade, Betterment, Charles Schwab, E Trade, Fidelity Investments, Robinhood, and Vanguard.

About PEO Partners, LLC

PEO Partners, LLC was established in 2019 by Randy Cohen, a Harvard Business School finance professor, and Jean-Louis Lelogeais, Co-Founder of SVP Global, a distressed debt investment firm, to build a Private Equity Liquid Alternatives platform. PEO has developed a proprietary investment strategy which involves a highly diversified portfolio of public equities that have the characteristics that buyout firms target when they acquire companies; this translates into mirroring the sector allocations of the LBO industry and, within these sectors, selecting individual stocks that have high debt capacity (high profitability, high payout ratios, low multiples, low β’s). For more information, please visit https://www.peo-partners.com/

About AlphaQuest, LLC

AlphaQuest is a research-driven, alternative asset management firm headquartered in New York City focused on delivering truly uncorrelated investment strategies at the intersection of mathematics, data science and investing. Founded in 2001 by chief investment officer Nigol Koulajian, the firm manages assets on behalf of some of the world’s largest institutional investors. Through a collaborative approach to research, the AlphaQuest team combines its values – intellectual humility, transparent collaboration, rapid prototyping and knowledge continuity – to improve its understanding of Alpha and tail risk, in an effort to develop quantitative investment strategies that benefit from short-term expansions in volatility and crowding, as well as longer-term shifts in the market regime. AlphaQuest continues to research and further broaden the application of over two decades of experience in measuring and capturing breakouts and breakdowns across global markets – to other asset classes, factors, investment strategies, and time frames. This includes novel ways to source convexity within futures and FX, individual equities, alternative markets, and other well-established systematic investment strategies. This research evolution has taken place while remaining faithful to one of the firm’s founding principles of delivering strong absolute returns that exhibit positive skew (right-tails). For more information, please visit https://alphaquest.com/

About Tidal Financial Group, LLC

Formed by ETF industry pioneers and thought leaders, Tidal Financial Group sets out to revolutionize the way ETFs have historically been developed, launched, marketed, and sold. With a focus on growing AUM, Tidal offers a comprehensive suite of services, proprietary tools, and methodologies designed to bring lasting ideas to market. Tidal is an advocate for ETF innovation. The firm is on a mission to provide issuers with the intelligence and tools needed to efficiently and to effectively launch ETFs and to optimize growth potential in a highly competitive space. For more information, visit https://www.tidalfinancialgroup.com/

Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the Fund, please call (877) 977-9971 or visit our website at www.peoalphaquestetf.com. Read the prospectus or summary prospectus carefully before investing.

General Market Risk. Economies and financial markets throughout the world are becoming increasingly interconnected, which increases the likelihood that events or conditions in one country or region will adversely impact markets or issuers in other countries or regions.

The Fund does not invest in PE investments and investors seeking direct exposure to such investments should consider an investment other than the Fund.

Fixed Income Securities Risk. The prices of fixed income securities respond to economic developments, particularly interest rate changes, as well as to changes in an issuer’s credit rating or market perceptions about the creditworthiness of an issuer. Commodities Risk. Exposure to the commodities markets may subject the Fund to greater volatility than investments in traditional securities.

Foreign Securities Risk. Non-U.S. investments may experience more rapid and extreme changes in value than investments in securities of U.S. companies. Financial markets in foreign countries often are not as developed, efficient, or liquid as financial markets in the United States, and therefore, the prices of non-U.S. securities and instruments can be more volatile.

Commodity-Linked Derivatives Tax Risk. The tax treatment of commodity-linked derivative instruments may be adversely affected by changes in legislation, regulations, or other legally binding authority.

Model Risk. Quantitative models used in the Fund’s strategy may cause the Fund to underperform other investment strategies. Flaws or errors in the quantitative model’s assumptions, design, execution, or data inputs may adversely affect the Fund’s performance.

High Portfolio Turnover Risk. The Fund may actively and frequently trade a significant portion of the Fund’s holdings. A high portfolio turnover rate increases transaction costs, which may increase the Fund’s expenses.

Equity Market Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual issuers, industries or the stock market as a whole. In addition, equity markets tend to move in cycles which may cause stock prices to fall over a short and extended periods of time. In a declining stock market, stock prices for all companies (including those in the Fund’s portfolio) may decline, regardless of their long-term prospects.

Derivatives Risk. Derivatives are financial instruments that derive value from the underlying reference asset or assets, such as stocks, bonds, commodities, currencies, funds (including ETFs), interest rates or indexes. The Fund’s investments in derivatives may pose risks in addition to, and greater than, those associated with directly investing in securities or other ordinary investments, including risk related to the market, imperfect correlation with underlying investments or the Fund’s other portfolio holdings, higher price volatility, lack of availability, counterparty risk, liquidity, valuation and legal restrictions.

Commodities Risk. Exposure to the commodities markets may subject the Fund to greater volatility than investments in traditional securities. The value of commodity-linked derivative investments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, such as drought, floods, weather, embargoes, tariffs and international economic, political and regulatory developments.

Reverse Repurchase Agreement Risk. Similar to borrowing, reverse repurchase agreements provide the Fund with cash for investment purposes, which creates leverage and subjects the Fund to the risks of leverage. Reverse repurchase agreements also involve the risk that the other party may fail to return the securities in a timely manner or at all.

Leverage Risk. As part of the Fund’s principal investment strategy, the Fund engages in activities, such as investing in derivative instruments, that involve the use of leverage. When the Fund uses leverage through activities such as investment in derivatives, the Fund has the risk that losses may exceed the net assets of the Fund. The net asset value of the Fund while employing leverage will be more volatile and sensitive to market movements.

New Fund Risk. As a new fund, there can be no assurance that the Fund will grow or maintain an economically viable size.

Distributed by Foreside Fund Services, LLC. Foreside is not affiliated with PEO AlphaQuest Thematic PE ETF

¹ The Russell 2500™ Index measures the performance of the small to midcap segment of the US equity universe.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250127741356/en/

Media Contacts

Jonathan Gasthalter/Mark Semer

Gasthalter & Co.

+1 (212) 257-4170

Source: PEO Partners, LLC

FAQ

What is the investment strategy of the new LQPE ETF?

LQPE combines equity and derivatives strategies, focusing on public companies that align with private equity investment themes while using derivatives for increased market exposure and downside protection.

How does LQPE aim to reduce market risk?

LQPE employs a trend-based hedging program through its derivatives strategy to reduce downside volatility during significant market downturns.

Which platforms offer trading for the LQPE ETF?

LQPE is available on major trading platforms including TD Ameritrade, Betterment, Charles Schwab, E Trade, Fidelity Investments, Robinhood, and Vanguard.

What is the benchmark index for the LQPE ETF?

While LQPE is benchmark-agnostic, it seeks to deliver excess or comparable returns compared to the Russell 2500® Index with lower volatility.

Who manages the LQPE ETF?

Tidal Financial Group serves as the investment advisor, while PEO Partners and AlphaQuest act as sub-advisors managing the equity and derivatives strategies respectively.