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The filings called them the Ex-Elon ETFs. They have arrived as the Redacted ETFs, which is the first time I can recall a fund solving a branding problem with a black marker pen.
Subversive Growth 100 Redacted ETF and Subversive S&P 500 Redacted ETF (XXQQ and XXSP, NYSE)
The idea is simple. Take the Nasdaq-100 or the S&P 500, remove every company “founded, controlled, or led by Elon Musk, or with which Mr. Musk is otherwise primarily associated”, and hand the spare weight back to everyone else in proportion to their size. The earlier filings used the tickers SPNE and QQNE, with the man still in the product name. The listed funds are XXQQ and XXSP, as though the name itself had been struck through.
The prospectus is candid about who this is for: investors who regard “corporate governance concerns, political risks, and heightened share-price volatility often tied to Musk-associated companies” as less desirable. Index exclusions are usually defined by a product, a sector or a carbon number. This one is defined by a person.
In practice the redaction list is short. In the Nasdaq-100 fund the Excluded Enterprises are Tesla and SpaceX. In the S&P 500 fund only Tesla counts, because SpaceX is not in that index, although the prospectus promises to remove it the moment it is added. So one fund is the S&P 500 minus one stock, with a standing instruction about a second.
The management fee is 0.55%, waived to 0.30%. That is roughly ten times what the cheapest plain S&P 500 trackers charge, for the privilege of owning one company fewer.
The detail worth noticing is who decides. Whether a company is “primarily associated” with Mr. Musk is settled by the adviser, through what the prospectus calls “an actively managed process”. It is an index with one rule, about one man, applied by judgement.
Tuttle Capital Photonics Income Blast ETF (OPTO, NYSE)
Photonics, which moves data as pulses of light rather than electrical signals, is the part of the AI trade investors reach for once they have run out of chip and memory funds to buy. Tuttle already offers a pure-play photonics fund under the ticker FOTO. OPTO is its income sibling.
The mechanics are layered. The fund gets exposure to photonics companies through shares, call options and synthetic long positions, and it expects to focus “primarily on small- and mid-capitalization companies”. On top of that it runs “a systematic put spread strategy to generate income”, pays out weekly, and warns that a portion of those payments “will likely be characterized as return of capital”. The fee is 0.99%.
Option premiums on small, specialised laser and transceiver makers are rich for a reason. The premium is high because the stocks move a lot, and the stocks move a lot because they are small companies making lasers.
Tuttle's Income Blast website describes the range as built on zero-days-to-expiry covered calls and lists three funds. OPTO is not among them, and its own prospectus talks about put spreads. The same website's disclaimer does name Tesla, so at least one issuer in this batch is still happy to mention the company the other is avoiding.
XFUNDS Technology Income ETF (VGTX, NYSE)
I recently noted that the XFUNDS range had borrowed Vanguard's best-known tickers and put an option strategy in the gap. The technology member has now listed, and VGTX sits one letter away from VGT, Vanguard's large technology fund, which charges under a tenth of a percent.
VGTX holds technology shares and technology ETFs, then trades put spreads and call spreads around them. A recent supplement added the freedom to sell calls on securities the fund does not own and to write cash-secured puts. Total annual expenses are 0.79%.
The prospectus gives the fund a primary objective of capital appreciation and a secondary objective of current income. The word in the name is Income. The XFUNDS homepage lists VOOY in its fund table but not VGTX, though VGTX does appear in the risk disclosures beneath, including one headed “NAV Erosion Risk Due to Distributions”.
The Trading Central Quant pair (TCQU and TCQW, Euronext Paris)
Trading Central, which supplies research and stock ratings to brokers, turned its scoring system into a European equity ETF with HANetf, the Trading Central Quant Europe 50 UCITS ETF. A US 50 fund and a global 50 fund have now followed it. The issuer's launch materials still talk only about the European one.
If the siblings follow the European fund, the method is easy to describe. Stocks are scored on value, growth and quality (25% each) and on income and momentum (12.5% each). The top 50 go in, with no more than 17 from any sector, each weighted at 2% and rebalanced monthly. HANetf describes the process as having “no human override”, which, after a recent prospectus that kept its human in charge of its machine, is at least refreshingly honest.
Vanguard USD High Yield Corporate Bond UCITS ETF (VUYD and VUYA, London Stock Exchange)
I recently wrote that Vanguard had brought a USD high-yield bond fund to Europe without saying how closely it would follow VCHY, its US cousin at 0.05%. The answer has arrived with the London listings. The TER is 0.15%, with one share class paying monthly and the other accumulating.
That is three times the American price, and still at the cheap end of what high yield usually costs in Europe.
There are no redactions, no put spreads and no five-factor scores. There are simply a great many companies borrowing at rates they would rather not pay, and a fund that collects the interest and charges very little for the trouble. In a batch that includes a fund defined by one man's absence, it is the only product whose name tells you exactly what you are getting.
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