Jason Trennert
Chief Investment Officer

Market and Fund Update Webinar 10/17/2022

The Strategas Asset Management Portfolio Management team provides an update on the market and shares their insight on how the investing landscape intertwines with the Strategas Global Policy Opportunities ETF (NYSE: SAGP) and Strategas Macro Thematic Opportunities ETF (NYSE: SAMT)

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The Fund may trade securities actively, which could increase its transaction costs (thereby lowering its performance) and could increase the amount of taxes you owe by generating short-term gains, which may be taxed at a higher rate. The linked video represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the fund or any security in particular. This research is provided for educational purposes only. Strategas claims no responsibility for its accuracy or the reliability of the data provided. This information is not intended to provide legal and/or tax advice. Please consult your financial advisor for further information. Diversification does not ensure a profit or guarantee against a loss. For fund holdings and performance, click here http://strategasetfs.com/sagp  http://strategasetfs.com/samt. Holdings are subject to change.

 

Ryan Grabinski
Portfolio Manager

Market Update with Ryan Grabinski and Todd Sohn 09/23/2022

Strategas Asset Management Portfolio Manager Ryan Grabinski sits down with Strategas ETF Strategist Todd Sohn to update on the market, discuss the Communication Services and Energy sector and how the sectors relate the Strategas Macro Thematic Opportunities ETF (NYSE: SAMT)

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The Fund may trade securities actively, which could increase its transaction costs (thereby lowering its performance) and could increase the amount of taxes you owe by generating short-term gains, which may be taxed at a higher rate. The linked video represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the fund or any security in particular. This research is provided for educational purposes only. Strategas claims no responsibility for its accuracy or the reliability of the data provided. This information is not intended to provide legal and/or tax advice. Please consult your financial advisor for further information. Diversification does not ensure a profit or guarantee against a loss. For fund holdings and performance, click here http://strategasetfs.com/samt. Holdings are subject to change.

Nicholas Bohnsack
Chief Executive Officer

Q&A with the Strategas Team 09/22/2022

Strategas Asset Management CEO & Portfolio Manager Nicholas Bohnsack, Portfolio Manager Courtney Rosenberger and ETF Strategist Todd Sohn, sit down to discuss investor questions, give their take on the current market, and how the Strategas Global Policy ETF (NYSE: SAGP) and Strategas Macro Thematic ETF (NYSE: SAMT) are positioned

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The Fund may trade securities actively, which could increase its transaction costs (thereby lowering its performance) and could increase the amount of taxes you owe by generating short-term gains, which may be taxed at a higher rate. The linked video represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the fund or any security in particular. This research is provided for educational purposes only. Strategas claims no responsibility for its accuracy or the reliability of the data provided. This information is not intended to provide legal and/or tax advice. Please consult your financial advisor for further information. Diversification does not ensure a profit or guarantee against a loss. Sources for data: Fixed Income Mutual fund flows sourced from ICI Database, ETF flow information sourced from Bloomberg.  For fund holdings click here http://strategasetfs.com/samt http://strategasetfs.com/sagp. Holdings are subject to change.

Jason Trennert
Chief Investment Officer

Market Update with Strategas Asset Management's Chief Investment Officer Jason Trennert 09/22/2022

Strategas Asset Management Chief Investment Officer Jason Trennert  reviews our base case for the economy and the market and its impact on the Strategas Macro Thematic ETF (NYSE: SAMT) and the Strategas Global Policy Opportunities ETF (NYSE: SAGP)

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The Fund may trade securities actively, which could increase its transaction costs (thereby lowering its performance) and could increase the amount of taxes you owe by generating short-term gains, which may be taxed at a higher rate. The linked video represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the fund or any security in particular. This research is provided for educational purposes only. Strategas claims no responsibility for its accuracy or the reliability of the data provided. This information is not intended to provide legal and/or tax advice. Please consult your financial advisor for further information. Diversification does not ensure a profit or guarantee against a loss. At 1:15 minute mark, “Terminal Rate- The terminal growth rate is the constant rate that a company is expected to grow at forever (Investopedia). At 1:51, "TINA" - defined as "TINA is an acronym for "there is no alternative." (Investopedia). For fund holdings click here http://strategasetfs.com/samt http://strategasetfs.com/sagp . Holdings are subject to change.

Jerry Hendricks
Portfolio Manager

Addressing the ETF Illiquidity Illusion 09/15/2022

One of the most sought-after answers requested from us regarding our Exchange Traded Funds is on the topic of liquidity.  Definitionally, liquidity refers to the ease of being able to exchange an investment from property into cash. As investors, we all want to know what kind of market will exist should we need to offload an investment – be it art, classic cars, or a stock.  Essentially the less liquid a security, the higher the transaction cost and more time it may require selling it.   If an investor owns a large portion of an illiquid stock, it could take more than a day to sell out of their position and often the price fluctuations do not move in the investors favor.  However, equating common stock liquidity with ETF liquidity does not tell the whole story.

Certainly, given their common characteristics of intraday pricing and secondary market trading, exchange traded funds and stocks have a lot of parallels.  But despite their commonalities, the liquidity of the two security types is not determined in the same manner.  Stocks, and other closed-end funds for that matter, have a fixed number of shares outstanding.  Thus, the focus for stocks is normally on trading volume or simply the number of shares trading during a defined period of time.  For an ETF, trading volume is less important given their creation / redemption process. 

Source ETF.com

 

Reviewing the exchange traded fund creation and redemption process as noted in the above diagram, you can see that during an in-kind creation the AP is delivering a basket of securities representing the underlying ETF security in return for shares of the ETF.  It is this creation and redemption process that plays out in the primary market.  In the redemption of ETF shares, the AP would receive the underlying basket of securities in exchange for the ETF shares, removing them from the secondary market.  It is this direct exchange of the underlying securities that plays a prominent role in determining liquidity of the ETF.  ETFs have the benefit of multiple avenues from which liquidity can be provided and, as such, often can often have better liquidity than many investors assume.   Should an investor want to make a large ETF trade where overall volume flow may seem light, they can engage with the authorized participants (AP) in the primary market to create or redeem shares directly.

But what if you simply do not have the access to an AP to transact in the primary market?  While the spreads in the secondary market may not be as tight as you could receive in the primary market, the AP is still providing some cover behind the scenes as they are constantly monitoring the secondary market. In fact, one of their main functions is to help ensure that the market price of the ETF is in line with the underlying net asset value (NAV) of the underlying securities.  It once again comes down to the liquidity of the underlying securities.  Strong liquidity in the underlying names should translate into a liquid exchange traded product.

 

 

This information is not meant to be investment advice. Investing involves risk, including the possible loss of principal.

Carefully consider each Fund’s investment objectives, risk, and charges and expenses. This and other information can be found in the Fund’s summary or full prospectus which can be obtained by calling 855-457-3637 or by visiting strategasetfs.com. Please read the prospectus carefully before investing.

Strategas Asset Management, LLC serves as the investment advisor for each Fund and Vident Investment Advisory, LLC serves as a sub advisor to each Fund. The Funds are distributed by SEI Investments Distribution Co. (SIDCO), which is not affiliated with Strategas Asset Management, LLC or any of its affiliates.

Jason Trennert
Chief Investment Officer

Strategas Securities Interview with Jason Trennert 08/02/2022

Strategas Asset Management Chief Investment Officer Jason Trennert sat down with Pat Alwell of Strategas Securities to answer questions on the Strategas Macro Thematic Opportunities ETF (NYSE: SAMT), macro-economic indicators and the investment implications of the ongoing market volatility

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The Fund may trade securities actively, which could increase its transaction costs (thereby lowering its performance) and could increase the amount of taxes you owe by generating short-term gains, which may be taxed at a higher rate. Holdings are subject to change. The linked video represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the fund or any security in particular. This research is provided for educational purposes only. Strategas claims no responsibility for its accuracy or the reliability of the data provided. This information is not intended to provide legal and/or tax advice. Please consult your financial advisor for further information. For fund holdings click here http://strategasetfs.com/samt Holdings are subject to change.

Jerry Hendricks
Portfolio Manager

Exploring Tax Efficiencies Within Our ETFs 08/02/2022

(in)KIND ETF Tax Treatment

For all the research and analysis behind a portfolio managers’ insight, their main focus, for the most part, is to provide investment opportunities for clients via their end products.  These portfolio managers along with numerous do-it-yourself investors continuously put forth tremendous efforts with the belief (and hope) that their hard work will provide them with notable appreciation on their investments.  The catch-22 here is that the more you earn the greater the potential taxable event.  Any transaction that results in taxes owed to a government entity is deemed a taxable event and can keep investors and portfolio managers up at night.  The most common taxable event scenarios we encounter include receiving dividends and interest or selling a stock for a gain.  So how does one maximize their appreciation on an investment while also minimizing their potential tax burden? One method could be to hire a competent fund or tax account, whose expertise focuses on tax-efficient strategies.  A second, more cost-effective option could be to invest in products that are deemed more tax efficient.  Exchange Traded Funds have frequently been touted as more tax efficient than their comparable brethren, the mutual fund.  But what exactly does it mean to be more tax efficient and how do the mechanics work?  We at Strategas, believe we have created two new products which will provide the normal tax efficiencies of the aforementioned exchange traded fund (ETF), while adding an additional level of consideration.  Let’s first explore the two main reasons ETFs are believed to be so tax efficient.

The First Benefit - Cashing out concern

For most investors, the realization that ETFs are more tax efficient than mutual funds (in terms of creation and redemptions) is not a new concept.  If an investor owns a mutual fund and decides to redeem the investment, the mutual fund must sell securities to raise cash to meet the redemption request. The resulting transaction, should it create a capital gain, would then cause all those invest in the mutual fund to be responsible for that tax liability.   If this redemption transaction results in a capital gain, the tax liability would be shared by all mutual fund investors.  This means that even investors who did not sell shares would be burdened by the capital gains tax.  On the other hand, with ETFs, when an investor redeems their shares, they can simply sell them in the open market.  This transaction, while a taxable event to the investor who is cashing out, would not impact other investors who opted to hold their security.  But what happens when the Authorized Participant (AP) needs to reduce the number of outstanding ETF shares in the market?  This is an additional tax efficiency of ETF investments.  In this scenario, the AP and the ETF issuer can simply do an “in kind” redemption whereby the issuer simply provides the underlying holdings for the ETF basket in exchange for ETF shares.  Because there has not been a sale or taxable event, there are no capital gain implications. 

The Second Benefit - The Custom Creation Around a Rebalance

In the Fall of 2019, the Securities and Exchange Commission (SEC) passed Rule 6c-11.  This ruling, more commonly known as the ETF Rule, lowered the barrier of entry for new and smaller issuers.  But that wasn’t the only benefit to this rule.  The ETF Rule also allowed the use of custom baskets for creations and redemptions that may differ from the underlying portfolio.  These new custom baskets must be in the best interests of investors. The use of these baskets has provided an extra benefit when trying to manage against capital gain distributions.  In fact, many of our investors often ask us how we manage capital gains when rebalancing our portfolio.  Well, we are fortunate enough to have partnered with Vident Investment Advisory, LLC.  Our sub-adviser’s tax expertise related to these custom creation units in an invaluable partnership that looks to achieve both investing and tax planning goals.  

One might question how the use of custom baskets helps mitigate capital gains?  The best way to describe this is with the following diagram provided by our experts at Vident.  Let’s start with the assumption that an ETF has been created with a standard or initial creation unit and has been trading for in the open marekt.  Next, let’s assume that the portfolio manager (PM) communicates with their sub-adviser that they are looking to change a portion of the underlying constituents via a rebalance.  The sub-adviser then takes the following steps to help mitigate the capital gains consequences via the use of a custom creation unit as noted below.

Portfolio managers also have the benefit of utilizing unrealized losses within the redemption process by marking those securities with losses as “cash in lieu” in their portfolio files. This will enable a portfolio manager to record those losses on the books to offset any future gains that may have (or will) occur, which can also be an advantageous tax strategy.

Tax Efficiency via In-Fund Thematic Rotation

Most of the 250 thematic ETFs we found on Bloomberg are of the single theme variety - disruptive innovation, inflation, or environmental impact.  There is even an ETF that tracks a natural disaster recovery index.  Therefore, while these funds could be very well run and true to their mandate, investors will still have to decide if the impact of a particular theme wanes over time. For example, do we sell our holdings in the open market in order to switch to a new investment - possibly creating a taxable event?  Or do we hold on to the product even though the underlying theme is losing momentum?  We believe our thematic rotation within the funds themselves provides a third element of tax efficiency other funds simply cannot provide due to their investment objective. Backstopped by our team of Institutional Investor ranked analysts, each of our ETFs has a component whereby we rotate in and out of themes over time as: 1) existing themes mature into new or revised themes, e.g. “Work From Home” moves to “Pent-Up Demand for Travel”; 2) themes age out with no natural related successor; or 3) an existing theme loses momentum relative to a new, more impactful theme.  We believe this element of thematic rotation can provide an added layer of tax efficiency as investors need not trade in and out ETFs in order to rotate into a new theme present in the market.

Our Strategas Global Policy Opportunities ETF (Ticker SAGP) is derived from the belief that corporate lobbying can produce positive benefits through successful policy outcomes.   An active ETF, SAGP uses publicly available lobbying data to consider investments in both domestic and international companies potentially set to benefit from periods of intense lobbying of the U.S. federal government.  The result is a politically agnostic portfolio leveraged to successful public policy outcomes which naturally shifts over time as new parties come into power and agendas adjust.  As the constituents change based on their lobbying intensity, so do the underlying themes these lobbying efforts represent.  It is this automatic thematic rotation that helps the fund stay relevant with respect to the policy issues corporations feel are the most impactful on the business landscape.

Our second product, the Strategas Macro Thematic Opportunities ETF (Ticker SAMT) is also an actively managed fund built around the underlying themes which our research-driven approach gives us the highest conviction in.  The fund invests in three to five macro themes at any given time based on analysis prepared by our firm’s research team which is documented and readily available.  Our thematic positioning is adjusted based on shifts in macro trends to ensure both the integrity of each theme’s investment thesis and the relevancy of its constituents.  Once a theme is deemed to lose momentum or another theme comes along that we believe has a better investable conclusion, we rotate out of one theme into another.  Again, we believe it is this thematic rotation that provides an added benefit and limits an investor’s need to sell an entire ETF when a current theme loses momentum which may occur in single-themed ETF scenarios.

Any investment an individual adds to their portfolio should be viewed in a holistic manner with respect to their analysis and underlying holdings.  That said, we believe our two exchange traded products provide an extra benefit with respect to tax treatment that could be extremely advantageous when considering your investment options. 

Jerry Hendricks
Portfolio Manager

How SAMT is Positioning in the Current Market Environment 07/06/2022

Strategas Asset Management Portfolio Manager Jerry Hendricks sits down with Strategas ETF Strategist Todd Sohn, to discuss trends in the market and positioning within the Strategas Macro Thematic Opportunities ETF (NYSE: SAMT)

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The Fund may trade securities actively, which could increase its transaction costs (thereby lowering its performance) and could increase the amount of taxes you owe by generating short-term gains, which may be taxed at a higher rate. Holdings are subject to change. The linked video represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the fund or any security in particular. This research is provided for educational purposes only. Strategas claims no responsibility for its accuracy or the reliability of the data provided. This information is not intended to provide legal and/or tax advice. Please consult your financial advisor for further information. For fund holdings click here http://strategasetfs.com/samt Holdings are subject to change.

Dan Clifton
Portfolio Manager

SAGP Portfolio Update Tilts Defensive 06/09/2022

Strategas Asset Management Portfolio Managers, Dan Clifton and Courtney Rosenberger discuss the Strategas Global Policy ETF's (NYSE: SAGP) 1st quarter rebalance and the changing policy landscape.

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The Fund may trade securities actively, which could increase its transaction costs (thereby lowering its performance) and could increase the amount of taxes you owe by generating short-term gains, which may be taxed at a higher rate. Holdings are subject to change. The linked video represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the fund or any security in particular. This research is provided for educational purposes only. Strategas claims no responsibility for its accuracy or the reliability of the data provided. This information is not intended to provide legal and/or tax advice. Please consult your financial advisor for further information. Sources for data: US revenue exposure data sourced from FactSet, Lobbying spend data is based off publicly available company disclosures under the Lobbying Disclosure Act. Calculations based off Strategas’ analysis of the data, Defense spending data based off country reporting and the SIPRI Military Expenditure Database.

Ryan Grabinski
Portfolio Manager

SAMT Portfolio Update – What’s Worked & Risks to The Portfolio 06/06/2022

Since the launch of the Strategas Asset Macro Thematic ETF (NYSE: SAMT), the ETF has outperformed its S&P 500 benchmark, in what has been a tough tape. What has helped the portfolio to outpace the broader indexes and its benchmark?

We’ve been rather cautious since the end of last year and knew we were probably early, but it has worked in our favor. From the data that we watch, we felt there were pockets of froth in particular with the Special Purpose Acquisition Company (SPAC) craze that hit the markets and companies going public with little to no revenue and in some instances, even pre-revenue. Even within the broader indexes, the percentage of companies trading at 10X price-to-sales was greater than the levels seen during the tech bubble. As of 5/31/2022, the percent of the Russell 3000 with a price to sales ratio greater than 10X, stands just north of 15%, which is off the highs, but still elevated. Our Cyclical Defensives theme, which consists of companies that may potentially see revenue growth, even in a downturn has aided performance since the launch.

Source: FactSet (As of 5/31/2022)*

What risks do you see to the portfolio?

I think there are two big risks to the portfolio as it stands now. The first is that if the Fed reverses course from what they are currently telling us they are going to do. We are operating under the impression that they are going to raise rates over the next 3-4 months at 50 basis points (bps) a clip to seriously fight inflation. We have no reason to believe that they will change course, especially with inflation readings north of 8%. However, if they do, I suspect technology & communications, two sectors we are underweight, would rally and cause us to lag the broader market. The other big risk to the portfolio is related to the Energy sector, especially in the near-term. More than 15% of the portfolio is allocated to the overall sector, which is 3X the allocation in our benchmark, the S&P 500. Any reversion in oil prices would certainly weigh on the portfolio. What gives us comfort is that energy companies can cover operating expenses with oil prices closer to $40 a barrel and drill profitable new wells at $70 a barrel.

Are you comfortable with the current themes and do you foresee any changes being made?

Our short answer is yes, we are comfortable with the themes and don’t expect to make any thematic changes in the immediate future unless there is a dramatic shift in monetary policy. Inflation is looking more and more like it is going to be around for an extended period of time. We are starting to see inflation get into the sticker components of the economy like rents and wages. We are paying close attention to the management of companies and what they are suggesting beyond the next twelve months. Given our more cautious stance on the overall market, we expect our Cyclical Defensive theme to do well. As I mentioned early, the percent of companies trading at 10x price-to-sales, is still elevated. Our Quantitative Tightening (QT) theme has been the strongest performer over the last three months and actual Fed QT is still in the early stages. The Fed has only increased interest rates 75bps and balance sheet run off is set to start this month, another sign we are still in the early innings. De-Globalization, our newest theme, is also very early as companies determine where they can source materials now that supply chains are permanently impaired. Ultimately, we believe companies are going to look inward in order to provide goods and services for their customers.

Published on June 6, 2022. The information is current only as of the date of this communication and we do not undertake to update or revise such information following such date. This communication is provided for informational purposes only and is not an offer, recommendation, or solicitation to buy or sell any security. This is not a complete analysis of every material fact regarding any company, industry, or security. Additional analysis would be required to make an investment decision. This communication is not based on the investment objectives, strategies, goals, financial circumstances, needs or risk tolerance of any particular client and is not presented as suitable to any other particular client. Past performance does not guarantee future results. All investments carry some level of risk, including loss of principal. Carefully consider each Fund’s investment objectives, risk, and charges and expenses. This and other information can be found in the Fund’s summary or full prospectus which can be obtained by calling 855-457-3637 or by visiting strategasetfs.com. Please read the prospectus carefully before investing. The Fund is new and has a limited operating history. The Fund may trade securities actively, which could increase its transaction costs (thereby lowering its performance) and could increase the amount of taxes you owe by generating short-term gains, which may be taxed at a higher rate. An investment in the Funds involves risk, including possible loss of principal. In addition to the normal risks associated with investing, the Fund is subject to macro-thematic trend investing strategy risk. Therefore, the value of the Fund may decline if, among other reasons, macro-thematic trends believed to be beneficial to the Fund do not develop as anticipated or maintain over time, or the securities selected for inclusion in the Fund’s portfolio do not perform as anticipated. The Fund may be more heavily invested in particular sectors and may be especially sensitive to factors and economic risks that specifically affect those sectors. In addition to the normal risks associated with investing, investments in smaller companies typically exhibit higher volatility. Strategas Asset Management, LLC serves as the investment advisor for each Fund and Vident Investment Advisory, LLC serves as a sub advisor to each Fund. The Funds are distributed by SEI Investments Distribution Co. (SIDCO), which is not affiliated with Strategas Asset Management, LLC or any of its affiliates. Shares of any ETF are generally bought and sold at market price (not NAV) and are not individually redeemed from the fund. Brokerage commissions will reduce returns. Indices are unmanaged and do not include the effect of fees, expenses or sales charges. One cannot invest directly in an index. *The Russell 3000 Index is a market-capitalization-weighted equity index maintained by FTSE Russell that provides exposure to the entire U.S. stock market. The index tracks the performance of the 3,000 largest U.S.-traded stocks, which represent about 97% of all U.S.-incorporated equity securities. Source: FTSE Russell. “Index Factsheet: Russell 3000 Index."

Ryan Grabinski
Portfolio Manager

Two Reasons SAMT is Overweight Energy 05/11/2022

Given the environmental policies of the administration, we believe the price of oil and gas will be higher for longer which will likely to lead to stubbornly-high rates of inflation. Just over one month into the second quarter, the daily average price of oil is up 50% from 2Q of 2021. A recent survey from the Dallas Fed suggested that companies can cover operating expenses with oil prices closer to $40 a barrel and profitably drill new wells at $70. In our view, the $100 oil that we currently have means companies will generate additional free cash flow (FCF) and net income that can be returned to shareholders via buybacks and dividends.

Source: Bloomberg (As of 5/6/2022)

The demand picture looks robust even with shutdowns occurring in China and only gets strong if the EU no longer utilizes oil from Russia. Domestically, crude oil product export data shows U.S. shipments are at decade highs. This would suggest that the demand picture for now is not slowing and some of the fears seen in the markets may be unwarranted. Sure, there are increased concerns about cost inflation as companies report quarterly earnings, but with oil prices where they are currently, companies have a cushion.