The fund pursues a market neutral strategy that combines long and short equity positions to keep net exposure to overall market direction low. It seeks returns from the relative performance among stocks selected by a quantitative model.

It suits investors who want to add to their portfolio an alternative source of returns with low correlation to the direction of the equity market.

It is an actively managed ETF run by Federated Hermes.

The MDT quantitative model builds long/short positions by buying stocks it judges to have upside potential and shorting stocks it expects to underperform. This lowers net exposure to the rise and fall of the overall market and takes a market neutral approach that seeks returns from the relative performance among stocks.

• Long/short stock selection based on a quantitative model
• An alternative strategy that lowers net exposure to market direction

Assets under management (AUM) stand at $159.7M, and the expense ratio is 1.94% per year.

Unlike a typical index-tracking ETF, it uses a long/short structure, so its correlation with market moves tends to be low. Because it is an alternative strategy, it is also important to check the fee level.

Because the performance of a market neutral strategy depends on the relative performance between long and short positions rather than on market direction, it tends to follow a path different from the strength or weakness of the broader index. Performance volatility depends heavily on the accuracy of the model's stock selection.

Interest in alternative strategy products tends to grow when market volatility rises or when investors look for diversification benefits. However, it is a relatively new product category, and its asset base is small compared with large core ETFs.

Its strength is an alternative return stream with low correlation to market direction, while strategy complexity and reliance on the model can work against it.

The two products shown in the table, HELO and FHEQ, are hedged equity ETFs that maintain stock exposure while cushioning declines with options, and CAOS focuses on tail risk protection. All of them retain market exposure, which sets them apart from this product, which concentrates on reducing net long/short exposure. If you are looking for more alternative strategies with low correlation to market direction, you can also compare BTAL, an anti-beta long/short product, MNA, which focuses on merger arbitrage, and QAI, which combines several hedge fund-style strategies.

Here are the points to review before investing in MKTN. Because it is an alternative strategy product that differs from a typical index-tracking ETF, it is important to thoroughly understand in advance its long/short strategy structure, costs, how to interpret its performance, and its correlation with your existing assets.

Performance depends heavily on the quantitative model's stock selection, and because of the long/short structure, losses can stack up on both the long and short sides in market phases that diverge from expectations. As this is an alternative strategy, you need to fully understand the factors that drive performance volatility.

It is a candidate worth reviewing for investors seeking an alternative source of returns with low correlation to market direction. However, considering strategy complexity, costs, and model dependence together, it is advisable to approach it as a supplementary tool within a portfolio.