Alpha Architect Tail Risk ETF (CAOS)
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CAOS: Better For Diversification Than Hedging
The Alpha Architect Tail Risk ETF employs three options strategies for partial large-cap equity exposure with downside risk mitigation and crash event upside. CAOS has delivered a 17.8% total return since March 2023, outperforming short-term bonds with similar volatility. The fund excels in fast market crashes but is an ineffective hedge during slow downtrends, as shown by historical performance.
CAOS: An Imperfect Hedging Tool
Alpha Architect Tail Risk ETF employs a novel, three-part strategy combining protective puts (insurance) with Box Spreads and Put Spreads (cash generators) to offset the typical "negative carry" cost of hedging. The underperformance during market turmoil is attributed to the fund's protective puts being set too far OTM, making the hedge primarily a volatility (vega) play rather than a delta play. CAOS is not a new concept; it was converted from a legacy mutual fund (AVOLX) in March 2023. This conversion means the fund has a long performance history.
CAOS: Hedging Against A Crash
Alpha Architect Tail Risk ETF implements three options strategies to provide exposure to stocks and interest rates while expecting to benefit from a market crash. The fund's performance since March 2023 has outpaced short-term bonds and its main competitor, with very low volatility. The track record of CAOS shows it does exactly what it is supposed to do, but it is not a good hedge in a slow market downtrend.
Alpha Architect Tail Risk ETF Investors
| Name | Quantity | Cost | Value | Profit ($) | Gain (%) |
|---|---|---|---|---|---|
 Jessica Clark Caerus Investment Advisors LLC | 3,888 | $352,874.88 | $351,864 | -$1,010.88 | -0.29% |
| XPN XY Planning Network Inc. XY Planning Network Inc. | 7,339 | $653,654.26 | $664,069.41 | $10,415.15 | 1.59% |
| SU Scott Ungar BlackDiamond Wealth Management LLC | 11,997 | $1.07M | $1.09M | $10,671.27 | 0.99% |
 cullen roche Orcam Financial Group | 4,775 | $420,768.7 | $432,089.75 | $11,321.05 | 2.69% |
 Joshua Moeller Hill Island Financial LLC | 133,831 | $11.99M | $12.11M | $123,529.76 | 1.03% |
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Alpha Architect Tail Risk ETF Profile
| BATS Exchange | US Country |
Overview
The fund operates as an actively managed exchange-traded fund (ETF), focusing on investments primarily in options contracts. These contracts are linked to the performance of securities within an index comprised of large-cap companies. By adopting this strategy, the fund seeks to leverage the market movements of significant, well-established companies to generate returns for its investors. The emphasis on large-cap entities signifies a preference for stability and recognizable growth potential in the market, catering to investors looking for a blend of security and opportunity within their investment portfolios.
Products and Services
- Actively Managed Exchange-Traded Fund (ETF)
This product involves active management strategies to curate a portfolio primarily composed of options contracts. These contracts derive their value from the performance of a carefully selected index of large-cap companies. Unlike traditional passive ETFs that track an index with little to no deviation, this actively managed ETF employs a strategic approach to option selection, aiming to capitalize on market trends and potential profit opportunities while managing risk.
