Ten Cap will launch its first active ETF, Tcap (ASX: TCAP), on the Australian Securities Exchange on 24 November.
Tcap’s underlying strategy will be based on the firm’s long-standing investment offering, Alpha Plus, which is one of the longest running and most consistently performing long short equity only funds in Australia. It has been managed by Ten Cap co-founder and lead portfolio manager, Jun Bei Liu, for over six years.
Ms Liu says Tcap will bring a strategy which has until now only been available to institutional and advised investors, to a broader market of retail investors.
“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.
“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,” she says.
Ten Cap co-founder and CEO, Jason Todd says the launch of an ETF was a natural step for the business.
“This ETF represents a number of firsts for Ten Cap, following the launch of the 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.
“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,” says Mr Todd.
Tcap aims for “equity-like” returns but with less market volatility given the strategy's ability to hold both long and short positions. It offers clients core exposure to the ASX200 Index but with the additional option of holding up to 10 per cent outside the benchmark in small and mid-cap stocks. It is style agnostic and utilises a proprietary sector-based hedging strategy.
The underlying strategy, the Alpha Plus fund, has returned 12.45 per cent a year since inception, outperforming the ASX200 index by 2.87 per cent.
Since taking over as manager of the fund in 2019, Ms Liu has delivered a return of 12.9 per cent a year compared to the ASX200 of 9.9 per cent - an annualised (net) outperformance of 298bps.
Ms Liu adds the current market conditions make it a good time for this launch.
“We believe the cyclical tailwinds for the Australian equity market will continue to push it higher as we start heading into the new year.
“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,” she says.
