XFUNDS, a leading provider of actively managed ETFs, today announced the launch of the XFUNDS 1-3 Month BOX ETF (NASDAQ: XCSH). Designed as a cash management solution, XCSH seeks to deliver investment results, before fees and expenses, that equal or exceed the performance of the one to three month U.S. Treasury bill market.
Rather than investing primarily in Treasury bills, XCSH seeks exposure to short-term interest rates through box spreads. A box spread combines four options positions, consisting of a synthetic long and a synthetic short with different strike prices but the same expiration date, to create a payoff profile similar to a short-term fixed-income investment. When the position is held intact through expiration, the offsetting options are designed to reduce exposure to movements in the underlying market and produce a defined payoff.
The fund generally invests in box spreads with approximately one to three months remaining until expiration. As existing positions mature, XCSH intends to reinvest the proceeds into new box spreads to maintain exposure to prevailing short-term rates. The fund may also hold cash, cash equivalents, money market funds, or Treasury bills as part of its portfolio management process.
“Investors have been looking for a smarter place to park their cash, and box spreads are one of the most efficient tools we’ve found to do that,” says David Nicholas, CEO of XFUNDS. “XCSH takes a strategy that’s traditionally been complex and out of reach for most investors, and puts it to work in a simple, easy-to-access ETF.”
XCSH joins XFUNDS’ growing lineup of actively managed ETFs spanning income, alternatives and thematic strategies. Learn more about XFUNDS and XCSH at https://nicholasx.com.
About XFUNDS
XFUNDS is a leading provider of actively managed ETFs. XFUNDS’ research primarily focuses on mitigating risk by utilizing derivatives and income-producing securities. The firm’s strategies attempt to find non-correlated returns in both up and down-market cycles. They use distinct tactics to measure risk and minimize portfolio volatility. XCSH joins a growing fund lineup that includes: FITZ, FIZY, FIAX, GIAX, BLOX, GLDN, SLVX, NUKX, WEPN, BHDG, NGHT and DRMY. Learn more at nicholasx.com.
Important Information
Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the Fund, please call (855) 563-6900 or visit our website at www.nicholasx.com. Read the prospectus or summary prospectus carefully before investing.
Investing involves risk. Principal loss is possible.
Derivatives Risk. Derivatives are financial instruments that derive value from the underlying reference asset or assets, such as stocks, bonds, or funds (including ETFs), interest rates or indexes. The Fund’s investments in derivatives may pose risks in addition to, and greater than, those associated with directly investing in securities or other ordinary investments, including risk related to the market, imperfect correlation with underlying investments or the Fund’s other portfolio holdings, higher price volatility, lack of availability, counterparty risk, liquidity, valuation and legal restrictions.
Box Spread Risk. A Box Spread is the combination of a Synthetic Long position coupled with an offsetting Synthetic Short position through a combination of options contracts on an underlying or reference asset such as index, equity security or ETF with the same expiration date. A Box Spread typically consists of four option positions two of which represent the Synthetic Long and two representing the Synthetic Short. If one or more of these individual option positions are modified or closed separately prior to the option contract’s expiration, then the Box Spread may no longer effectively eliminate risk tied to underlying asset’s movement. Furthermore, the Box Spread’s value is derived in the market and is in part, based on the time until the options comprising the Box Spread expire and the prevailing market interest rates. If the Fund sells a Box Spread prior to its expiration, then the Fund may incur a loss. The Fund’s ability to profit from Box Spreads is dependent on the availability and willingness of other market participants to sell Box Spreads to the Fund at competitive prices.
Counterparty Risk. The Fund is subject to counterparty risk by virtue of its investments in option contracts which exposes the Fund to the risk that the counterparty will not fulfill its obligation to the Fund.
Low Short-Term Interest Rates Risk. During market conditions in which short-term interest rates are at low levels, the Fund’s yield can be very low, and the Fund may have a negative yield (i.e., it may lose money on an operating basis). During these conditions, it is possible that the Fund will generate an insufficient amount of income to pay its expenses. In addition, it is possible that during these conditions the Fund may experience difficulties purchasing and/or selling securities, and may, as a result, maintain a portion of its assets in cash, on which it may earn little, if any, income.
High Portfolio Turnover Risk. The Fund may actively and frequently trade all or a significant portion of the Fund’s holdings. A high portfolio turnover rate increases transaction costs, which may increase the Fund’s expenses.
Liquidity Risk. Some securities held by the Fund, including options contracts, may be difficult to sell or be illiquid, particularly during times of market turmoil. Markets for securities or financial instruments could be disrupted by a number of events, including, but not limited to, an economic crisis, natural disasters, epidemics/pandemics, new legislation or regulatory changes inside or outside the United States.
New Fund Risk. The Fund is a recently organized management investment company with no operating history. As a result, prospective investors do not have a track record or history on which to base their investment decisions.
Distributed by Foreside Fund Services, LLC.
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