Post New

“ OMAH, which is designed to provide investors an opportunity to invest like Warren Buffett but with the addition of an options strategy that targets 15% annual income, paid monthly, passed the $500 million mark in just six months, a rare feat in the crowded and competitive ETF marketplace.

"We’ve been thrilled with the response that OMAH has gotten from such a wide array of investors," said Adam Patti, CEO of VistaShares. "As OMAH has been gathering momentum though, we’ve been hard at work continuing to build out the full lineup of VistaShares ETF solutions. We’re just getting started."

On September 9th, VistaShares introduced its newest fund: the VistaShares Target 15™ ACKtivist Distribution ETF (ACKY). Similar in approach to OMAH, ACKY provides investors with an equity portfolio designed to mirror the publicly disclosed holdings of Bill Ackman’s Pershing Square Capital, while also seeking to deliver 15% annual income via an actively managed options overlay strategy.“ https://finance.yahoo.com/news/vistashares-omah-et...

Assets now 688 million, expense ratio .95

Assets now 688 million expense .95.

...but with the addition of an options strategy that targets 15% annual income...

What is the likely long run outcome of an investment strategy that attempts to throw off 15%/year income from an underlying investment which is returning (say) inflation + 7%/year?

Only two outcomes spring to mind. A blowup from using too much leverage, or a steadily evaporating NAV. Those piles of free money on the floors of options trading exchanges are notoriously scarce.

That's not to say success at their goal is definitely impossible, just unlikely in the extreme, especially in a corporate/fund environment. My Berkshire portfolio threw off well over 20%/year for over 20 years, though only on average. I conservatively assume that there is a blowup out there that has long had its eye on me.

Jim

That's not to say success at their goal is definitely impossible, just unlikely in the extreme, especially in a corporate/fund environment. My Berkshire portfolio threw off well over 20%/year for over 20 years, though only on average. I conservatively assume that there is a blowup out there that has long had its eye on me.

I'm always amazed whenever you mention that you use leverage. Your logic always seems good, and your results have been great (and I gather you've not used large amounts of leverage), but using any leverage at all always surprised me.

Old pilots and bold pilots ... etc :-)

SA

I'm always amazed whenever you mention that you use leverage.

Yes, but in the most conservative way I can think of : )
Certainly I do not use broker margin loans, which can be called at any time for any or no reason. It definitely won't be a moment that's convenient for the borrower.

I use leverage only when interest rates are cheap, only when the loan is uncallable for at least 2-3 years, only with modest leverage ratios, and only when the valuation level is compelling. A lot of the good result was from "buy-low-sell-high" rather than just leverage. Also a few bucks from expired short puts or expired covered calls or other fancy footwork unrelated to leverage.

And of course, the private equity trick: any return calculation in the IRR family will exclude the portfolio drag from idle cash allocations which may be very high at times, so my IRR-style return on Berkshire by itself is not at all the same as my rate of return on the portfolio which held it.

Is leverage bad anyway? Maybe. There's evidence that consuming zero alcohol is the healthy choice, and I can't prudently recommend otherwise. I myself am not teetotal, but I like to think of myself as a responsible drinker rather than a lush. One must decide one's own best spot on the risk/reward curve, and stay at least a bit towards the conservative side of that line.

Jim

Hmmm, maybe a nice glass of Burgundy this evening...

Post New

US Policy FAQ

---

Contact Shrewd'm
Contact the developer of these message boards.