Ten Cap latest to join fund managers making active ETF pivot

Boutique long/short equity-only investment house, Ten Cap, has become the latest in the list of fund managers repackaging their long-term, successful strategies into active exchange traded fund (ETF) format to meet the recent surge in demand.

The Tcap ETF will leverage the strong-performing investment approach underpinning the long/short equity-only Alpha Plus offering, managed by Ten Cap co-founder and lead portfolio manager, Jun Bei Liu, for over six years.

Expected to launch on the Australian Securities Exchange (ASX) on 24 November, the ETF is designed to generate “‘equity-like’ returns… with less market volatility” by capitalising on its exposure to both long and short positions across the ASX200 Index, while also offering the extra option to hold “up to 10 per cent outside the benchmark in small and mid-cap stocks”.

Liu said Tcap will leverage the power of ETFs to bring a strategy traditionally reserved for institutional and advised investors to the retail market.

“We want all types of investors to gain access to our strategy and benefit from the returns that we have been generating for our existing investors for over two decades,” she said.

“The strategy’s defining feature is its ability to perform in both rising and falling markets. Gains can be generated from declining stock prices via short positions, making the fund’s performance less dependent on the overall direction of the market.”

The ETF launch follows the establishment of the Ten Cap business earlier this year.

“We wanted to offer an institutional grade product to a new set of investors and believe that ETFs are a great vehicle in which to do so and the right step for the growth of Ten Cap as a business,” Ten Cap co-founder and CEO, Jason Todd, said.

“Demand for active ETFs is increasing as investors look for more cost-effective ways and an easier path to access investment strategies. ETFs are helping to reduce the friction costs of investing and at the same time are providing a broader range of investment products and options to a new generation of investors. We don’t want the Alpha Plus strategy to only be available to institutional and/or high net worth clients.

“The Tcap ETF is best suited for those who seek exposure to a unique and complex strategy that cannot be replicated via passive options, and one that is led by Jun Bei, an exceptional investment manager with a solid track record of delivering return to investors.”

The Alpha Plus fund has returned 12.45 per cent a year since inception and 12.9 per cent with Liu at the helm since 2019, consistently outperforming the ASX200 index.

“We believe the cyclical tailwinds for the Australian equity market will continue to push it higher as we start heading into the new year,” Liu said.

“It is unlikely that the bull market is nearing an end, and as ‘fear of missing out’ intensifies we think this could sharply push markets higher which will benefit the performance and returns generated by our ETF.”