FolioBeyond Rising Rates ETF (RISR)

Overview

The FolioBeyond Rising Rates ETF (RISR) is designed to provide investors with exposure to US Treasury Inflation-Protected Securities (TIPS) while hedging against the negative impact of rising interest rates. The ETF uses a duration-hedged approach, seeking to outperform traditional TIPS ETFs in a rising rate environment.

Reputation and Reliability

FolioBeyond is a relatively newer player in the ETF market. The issuer is known for innovative and strategic ETF offerings. The reliability is dependent on its investment strategy and market acceptance of its products.

Management Expertise

The management team brings experience in fixed income and quantitative investment strategies, focusing on innovative approaches to address specific market challenges.

Goal

The primary investment goal of RISR is to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the FolioBeyond Rising Rates Index.

Investment Approach and Strategy

Strategy: RISR employs an actively managed strategy that uses a combination of long TIPS positions and short positions in Treasury futures to hedge against rising interest rates.

Composition The ETF primarily holds TIPS and Treasury futures contracts, with adjustments made to manage duration and interest rate sensitivity.

Market Share: RISR's market share within the TIPS and inflation-hedging ETF space is relatively small due to its niche strategy and smaller AUM compared to larger, more established competitors.

Total Net Assets (AUM): 24741167

Key Competitors

• iShares TIPS Bond ETF (TIP)
• Vanguard Inflation-Protected Securities ETF (VIPS)
• Schwab US TIPS ETF (SCHP)

Competitive Landscape

The TIPS ETF market is dominated by large, passively managed funds like TIP and VIPS. RISR differentiates itself through its active, duration-hedged strategy. RISR has the advantage of potentially outperforming during rising rate environments. The disadvantage is the higher expense ratio and active management risk.

Historical Performance: Historical performance data is essential for evaluating this ETF's effectiveness in various interest rate environments. The ETF has demonstrated some periods of outperformance compared to traditional TIPS ETFs when interest rates have increased.

Benchmark Comparison: The ETF's performance is best compared against an index that reflects rising rate sensitivity and TIPS performance, like the Bloomberg Barclays US Government Inflation-Linked Bond Index. Its duration-hedged approach aims to outperform standard TIPS ETFs in rising rate scenarios.

Expense Ratio: 0.5

Average Trading Volume

The average trading volume of RISR is relatively low, indicating limited liquidity.

Bid-Ask Spread

The bid-ask spread of RISR can be wider than more liquid ETFs, potentially increasing trading costs.

Market Environment Factors

Economic indicators such as inflation expectations, interest rate policies of the Federal Reserve, and overall market sentiment regarding fixed income investments significantly impact RISR. Rising inflation expectations generally benefit TIPS, while rising interest rates can negatively impact traditional TIPS but positively impact RISR due to its hedging strategy.

Growth Trajectory

RISR's growth trajectory is linked to investor demand for inflation protection and hedging against rising rates. Changes in strategy and holdings could involve adjustments to the duration hedge or the mix of TIPS and Treasury futures based on market conditions.

Competitive Edge

RISRu2019s competitive edge lies in its active, duration-hedged strategy, which aims to protect against rising interest rates. This distinguishes it from passive TIPS ETFs that are negatively impacted by rising rates. Its active management can adapt to changing market conditions. However, active management also introduces the risk of underperformance compared to its benchmark.

Volatility

RISR's volatility depends on the volatility of TIPS and Treasury futures, as well as the effectiveness of the duration hedge. Periods of interest rate uncertainty can lead to increased volatility.

Market Risk

Market risk includes interest rate risk, inflation risk, and the risk associated with using futures contracts. The effectiveness of the duration hedge is critical in mitigating interest rate risk.

Ideal Investor Profile

The ideal investor for RISR is someone seeking inflation protection and a hedge against rising interest rates, especially those who believe interest rates will increase. This ETF is also ideal for sophisticated investors familiar with actively managed ETFs and futures contracts.

Market Risk

RISR is most suitable for active traders or investors with a shorter-term horizon who are concerned about rising rates. Long-term investors may prefer broader, passively managed TIPS ETFs if interest rate risk is not a primary concern.

FolioBeyond Rising Rates ETF (RISR) offers a unique approach to inflation protection by hedging against rising interest rates through active management and the use of Treasury futures. While differentiating itself from passive TIPS ETFs, RISR's active strategy carries management risk. With a small market share, RISR caters to investors seeking specialized protection in a rising rate environment. Investors need to consider its higher expense ratio and lower liquidity compared to larger competitors.

Data Sources:

• ETF provider websites
• Financial data providers
• Market analysis reports

Disclaimers:

The data and analysis provided are for informational purposes only and do not constitute financial advice. Investment decisions should be based on individual circumstances and consultation with a qualified financial advisor. Market data is subject to change.