This is an actively managed large-cap ETF that uses the S&P 500 Index as its benchmark and aims to enhance exposure in rising markets while reducing exposure in falling markets. It combines individual stock selection with derivatives such as options and futures.

It suits investors who seek returns above the S&P 500 Index while also wanting to soften losses during market downturns.

It is an ETF run with an active management approach by Aptus.

The fund holds large-cap stocks that pass quality, value, and growth screens, weighted in a way that dampens volatility. It then adds put options, put spreads, and stock index futures, aiming for greater exposure than the index when markets rise and reduced exposure when markets fall.

• An options and futures overlay strategy that targets asymmetric exposure
• Stock selection based on large-cap quality, value, and growth screens

Assets under management (AUM) stand at $134.4M, and the total expense ratio is 0.79% per year.

The fund broadly follows the large-cap benchmark, but its structure means relative performance in up and down markets can vary over time, depending on the weight of the options and futures overlay and the market environment. Short-term swings are also affected by the timing of adjustments to derivative positions.

Investor interest in actively managed derivatives overlay strategies continues, and fund flows tend to react sensitively to periods of market volatility, with shifts in demand within the large-cap asset class also playing a role.

Its asymmetric design, which seeks excess returns in rising markets and softer losses in falling markets at the same time, is a strength. However, the structure is complex because of the derivatives involved, which investors should keep in mind.

Among the hedged and buffered large-cap ETFs shown in the table, the HELO and FHEQ group uses options to try to defend against declines, an approach similar to that of UPSD, while the CBOX and INFO group uses collateral management and factor strategies respectively, giving them different structures. Meanwhile, the ADME, DRSK, and ABUF group, products from the same asset manager, offers alternatives with different levels and methods of downside protection, and the income-focused DUBS and JUCY group can also serve as comparison candidates.

Here are the points to review before investing in UPSD. It is important to fully understand its asymmetric exposure design, its use of derivatives, and the characteristics of its non-diversified portfolio in advance.

Because of the derivatives overlay, there may be periods when the asymmetric exposure does not work as intended, and the non-diversified structure can leave the fund relatively exposed to the volatility of individual stocks.

As an actively managed large-cap strategy that pursues asymmetric exposure relative to the S&P 500 Index, it is an option worth considering for investors who want downside protection and upside participation at the same time. However, the derivatives structure and costs need to be thoroughly checked in advance.