Arcanum Asset Management has partnered with white-label exchange-traded product (ETP) issuer Leverage Shares to launch a strategy that looks to emulate the investment style of Warren Buffett.
The Buffettique Growth Strategy ETP (BUFF) is listed on the London Stock Exchange, Deutsche Boerse and Euronext Amsterdam with a management fee of 1% and a 10% performance fee.
The “core building block for growth-oriented portfolios” is split into two sleeves, with 70-80% being allocated to ‘inevitables’, which are investment vehicles Arcanum believes will outperform due to the ethos of their management.
This segment has target weights of:
Leverage Shares 2x Long Berkshire Hathaway ETP (2BRK) 20%
Scottish Mortgage Investment Trust 10%
BlackRock Smaller Companies Trust 10%
Finsbury Growth & Income Trust 10%
Pershing Square Holdings 10%
Smithson Investment Trust 10%
Central Securities Corporation 10%
Given BUFF’s current assets under management (AUM) of $664,000, its 20% target position in Leverage Shares’ 2BRK is equivalent to just over 25% of the double leveraged ETP’s current AUM. 2BRK carries a fee of 0.75% and a margin rate of 1.5%.
BUFF’s second sleeve allocates 20-30% to ‘workouts’, which are four ‘special situations’ single company allocations picked each month by Arcanum using a “black box strategy” that selects either stocks or inverse ETPs.
The four current allocations are to NVIDIA, Advanced Micro Devices, Netflix and Alphabet.
BUFF has returned 3.5% so far in 2023, as at 1 June.
Matt Rickard, managing director of Arcanum, commented: ‘’We have the portfolio strategy and wanted to focus on the added value we can bring to our investors without recreating the entire infrastructure, which would incur crippling costs for a firm our size, to run an ISIN and distribute across countries.
“We are excited to work with Leverage Shares as they were able to wrap our multi-instrument portfolio strategy and make this available for a wide range of investors.”
Raj Sheth, commercial director at Leverage Shares, added: “‘BUFF is the first ETP in Europe to offer exposure to a basket of UK investment trusts, US closed-end investment companies, US single stocks and ETPs to build a ‘core’ allocation that balances growth and value.
“Its 20% allocation to four US individual ‘Buffett-like’ stocks is driven by a proprietary methodology based on shorter term indicators, which, if it determines markets are ‘risk-off', will underweight this exposure to add a small, inverse position to the S&P 500 to potentially add performance irrespective of market direction.”
Leverage Shares entered white labelling in partnership with Florida-based Mourelle Investments last June, with an ETP offering long-short exposures on US equities.