TrueShares Structured Outcome (September) ETF (SEPZ) seeks to provide defined upside participation and downside protection over a specific outcome period ending in September. This structured outcome strategy uses options overlays on equity market exposure to create predetermined return profiles with known maximum gains and losses.
How It Works
SEPZ employs a structured outcome approach using FLEX options on the SPDR S&P 500 ETF Trust to create defined risk-return parameters. The fund establishes upside caps and downside buffers at inception, typically protecting against the first 10-15% of losses while capping gains at predetermined levels. Holdings reset annually in September with new outcome parameters. This actively managed strategy requires precise options positioning and daily portfolio adjustments.
Key Features
- Provides defined downside protection buffer, typically shielding investors from first 10-15% of market losses during outcome period
- Establishes known upside participation cap at inception, allowing investors to understand maximum potential returns before investing
- September outcome period aligns with fiscal year-end planning and tax-loss harvesting strategies for institutional investors
Risks
- This ETF can lose value beyond the buffer level if markets decline more than the protected amount, with losses accelerating rapidly
- Upside participation is capped, meaning investors miss gains above predetermined levels even in strong bull markets throughout the period
- Options complexity and daily rebalancing create tracking error risk and potential for the fund to deviate from intended outcomes
Who Should Own This
Best suited for tactical allocation (5-15% of portfolio) by investors with 1-year time horizons seeking defined risk-return outcomes. Medium risk tolerance required despite downside buffer. Ideal for pre-retirees wanting equity exposure with known maximum loss parameters or investors implementing barbell strategies combining this with higher-risk assets.