Summary:
Calamos launches a new ETF providing 100% downside protection against Bitcoin volatility.
The CBOJ ETF offers an upside potential of 10% to 11.5% over one year.
Upcoming ETFs CBXJ and CBTJ will provide 90% and 80% protection respectively.
Management fee set at 0.69%, higher than the average 0.51% for U.S.-based ETFs.
Growing interest in downside-protection ETFs amidst regulatory changes.
A Groundbreaking ETF Launch
A new exchange-traded fund (ETF) by the global investment management firm Calamos has entered the market, promising to shield investors from the notorious volatility of Bitcoin.
Key Features of CBOJ ETF
The CBOJ ETF, the first in a suite of three, offers 100% downside protection while providing an upside potential of 10% to 11.5% over a one-year period. As of the latest updates, it has traded approximately 635,714 shares.
Upcoming Funds
The other two funds, named CBXJ and CBTJ, are set to launch on February 4 and will provide 90% and 80% protection, respectively. Their upside caps range from 28% to 30% and 50% to 55%.
How Downside Protection Works
This downside protection is achieved through strategic investments in U.S. Treasuries and options on Bitcoin index derivatives. The management fee for these ETFs stands at 0.69%, which is higher than the average 0.51% for U.S.-based Bitcoin ETFs. However, many investors might find this extra cost justifiable for the added security against price swings.
Institutional Perspectives
While Bitcoin enthusiasts remain optimistic about the cryptocurrency's long-term value, traditional institutional investors express concerns regarding its volatility.
Competition with MicroStrategy
A question arises whether this ETF might compete with MicroStrategy's convertible bonds, both offering downside protection. However, according to analyst James VanStraten, the two differ significantly, as MicroStrategy's notes do not cap upside potential.
Rising Popularity of Downside-Protection ETFs
The introduction of downside-protected ETFs has gained traction recently, especially with the anticipated regulatory changes under the incoming administration, creating optimism for future ETF approvals from the Securities and Exchange Commission.
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