Given bitcoin’s recent performance, it’s possible that some advisors and investors haven’t prioritized exploring risk-mitigated exposure to the asset. That said, maintaining a more derisked portfolio of the digital currency may pay off in the long term. This is due to the intrinsic way that the cryptocurrency’s price tends to move. The asset class can certainly see immense price rallies, as it has in recent months, but it can also be subject to significant drawdowns. As such, having a plan for when the bitcoin market gets volatile can help one’s portfolio stay afloat while others may sink.
The only question is, how does one go about gaining low-risk bitcoin exposure? After all, the digital currency is inherently more of a risk-on asset.
Recently, Calamos Investments released a new collection of Laddered Protected Bitcoin ETFs. Offering a blend of bitcoin returns and a level of downside protection, these funds could provide an ample amount of derisked bitcoin exposure.
As an example, let’s take a look at the Calamos Laddered Bitcoin 90 Series Structured Alt Protection ETF (CBXL). The fund offers risk-adjusted capital appreciation through laddered exposure to the price returns of the cryptocurrency.
The core of CBXL’s strategy comes from laddering exposure to four different Calamos Protected Bitcoin ETFs. These four underlying ETFs provide strong exposure potential to the cryptocurrency’s price performance, up to a predetermined cap.
Where CBXL stands out is through its risk management benefits. Each of its laddered ETFs limits maximum loss over its respective outcome period to -10%, following expenses and fees. This can help mitigate the potential downside one could be exposed to, should the digital currency see a drawdown.
Another factor helping with risk mitigation is CBXL’s laddered framework. The fund’s four ETFs each have four distinct outcome periods, meaning CBXL’s investors gain access to four distinct time horizons within a single ticker. This can help mitigate some of the risk one could face if one of CBXL’s underlying ETFs were to underperform.
All in all, this approach gives CBXL a niche as a way to maintain exposure to bitcoin while taming down one’s risk profile. Regardless of whether bitcoin’s price is going up or down, CBXL will be ready to deliver on its strategy for its investment community.
For more news, information, and strategy, visit the Crypto Content Hub.
Before investing, carefully consider the Fund’s investment objectives, risks, charges and expenses. Please see the prospectus and summary prospectus containing this and other information which can be obtained by calling 1-866-363-9219. Read it carefully before investing.
An investment in the Fund is subject to risks, and you could lose money on your investment in the Fund. There can be no assurance that the Fund will achieve its investment objective. Your investment in the Fund 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 can increase during times of significant market volatility. The Fund 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.
FUND-OF-FUNDS RISK. Shareholders of the Fund will experience investment returns that are different than the investment returns provided by an Underlying ETF. The Fund does not itself pursue a defined outcome strategy, nor does the Fund itself provide downside protection against SPY losses. Because the Fund will typically not purchase an Underlying ETF on the first day of a Target Outcome Period, it is not likely that the stated outcome of the Underlying ETF will be realized by the Fund. The Fund will be continuously exposed to the investment profiles of each of the Underlying ETFs during their respective Target Outcome Periods. The Fund, with its aggregate exposure to each of the Underlying ETFs, may have investment returns that are inferior to that of any single Underlying ETF or group of Underlying ETFs over any given time period. In between the semi-annual rebalance period of the Index, because the Fund is not equally weighted on a continuous basis, the Fund may be exposed to one or more Underlying ETFs disproportionately when compared to other Underlying ETFs. In such circumstances, the Fund will be subject to the over-weighted performance of such Underlying ETF. As a shareholder in other ETFs, the Fund bears its proportionate share of each ETF’s expenses, subjecting Fund shareholders to duplicative expenses.
There are no assurances the Underlying ETFs will be successful in providing the sought-after protection. The outcomes that the Underlying ETFs seek to provide may only be realized if you are holding shares on the first day of the outcome period and continue to hold them on the last day of the outcome period, approximately one year. There is no guarantee that the outcomes for an outcome period will be realized or that the Underlying ETFs will achieve its investment objective. If the outcome period has begun and the underlying ETF has increased in value, any appreciation of the Fund(s) by virtue of increases in the underlying ETF since the commencement of the outcome period will not be protected by the sought-after protection, and an investor could experience losses until the underlying ETF returns to the original price at the commencement of the outcome period. The Underlying ETFs are subject to an upside return cap (the “Cap”) that represents the maximum percentage return an investor can achieve from an investment in the fund(s) for the outcome period, before fees and expenses. If the outcome period has begun and the Underlying ETFs have increased in value to a level near to their individual Cap, an investor purchasing at that price has little or no ability to achieve gains but remains vulnerable to downside risks. Additionally, the Cap may rise or fall from one outcome period to the next. Unlike the Underlying ETFs, the Fund itself does not pursue a target outcome strategy. The protection is only provided by the Underlying ETFs and the Fund itself does not provide any stated downside protection against losses. The Fund will likely not receive the full benefit of the Underlying ETF downside protections and could have limited upside potential. The Fund’s returns are limited by the caps of the Underlying ETFs. The Cap, and the Fund(s) position relative to it, should be considered before investing in the Fund(s) website, www.calamos.com, provides important
Fund information as well as information relating to the potential outcomes of an investment in the Fund(s) on a daily basis.
Cap Rate – Maximum percentage return an investor can achieve from an investment in the Fund if held over the Outcome Period.
Protection Level – Amount of protection the Fund is designed to achieve over the Days Remaining. Outcome Period – The defined length of time over which the outcomes are sought.
Calamos Financial Services LLC, Distributor
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