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Should You Consider Investing in the Swan ETF?


Some investors have become skittish due to the ups and downs in the market. Increased volatility in some segments has been a direct result of the current Covid-19 pandemic that has impacted markets world-wide. Those feeling the pinch in their investment accounts have reason to choose carefully among investment options. The world goes on. The market is still alive with ripe opportunities to enhance investment portfolios with strategies designed for the current climate within the market. One such option you may wish to consider is through investment in exchange-traded funds. Investors building their long-term retirement portfolios may find the Swan ETF an attractive option.

What is the Swan ETF?

According to Investopedia, the Swan ETF is an open-ended fund that is issued by Amplify Investments. The inception date is fairly recent, launching on November 6, 2018. The Swan fund tracks an index on an S&P 500 ETF(SPY) with long-dated options and US Treasurys with a 10-year maturity. The fund provides investors with muted equity exposure through long-dated options on SPY, the mega-ETF tracking the S&P 500.

Description of the Swan ETF

The Swan ETF is a large fund that is valued a $685.31 million in assets under management. The expense ratio is 0.49 percent. Investors may find the strategy attractive because it is designed to mitigate the downside risk The options of the fund target seventy percent of participation that fluctuates either up or down over the market cycle. The rolls take place in June and again in December. Extra protection enhances risk protection measures through the treasury portion of the fund. This is based on the assumption that the haven treasury will rise if equity markets fall. The fund is managed with Treasurys of mixed maturities to reflect 10-years when aggregated. This component carries its own risk and return potential. The asset ratio of the Swan ETF is fixed at 90 percent treasury with 10 percent options at each time the 6-month index reset occurs. The equity notional exposure of the index aligns with the total index market cap.

Benefits of the Swan ETF

According to, Amplify BlackSwan Growth & Treasury Core ETF has been rated by the MSCI ESG Fund rating with an A score. The rating method considers opportunities arising from governance, environmental, and social factors, along with the long-term risks and resiliency of the portfolios. The top rating is AAA and the lowest is CCC. The Swan ETF provides investors with exposure to the equities market through indirect investments that are less risky than direct investments in the stocks of the holdings.

One of the greatest benefits of going with an ETF is that a diverse portfolio of holdings provides a measure of safety. If some of the sectors represented through diverse holdings fail to perform at satisfactory levels, there are others from other sectors of the market that are likely to perform better, evening out any volatility within certain sectors. This is an excellent mechanism for compensation for poor performance in one or more sectors.

The Swan ETF may be a good investment strategy if you're interested in making a long term investment that features safeguards from volatility and down sells. The exchange-traded fund's strategy provides protection from a loss than a direct investment in stocks. Even in a Black Swan event, there is less chance of substantial losses as the management and platform provide a hedge against high losses as well as protection from inflation.

Swan ETF Tradability

The liquidity and readability of the ETF is another consideration when deciding if this investment strategy is the right choice for inclusion in your portfolio. Swan ETF statistics show an average daily share volume of 269,374 shares and the daily $ volume average of $8.59 million. The average spread percentage for this ETF is 0.15 percent. The average spread $ is $0.05. The maximum 12-month premium/discount range is 13.19/-2.46%. The Global Percentile rank is 69.45 with a peer group percentile rank of 56.11.

Holdings of Swan ETF

According to Amplify ETFS, there are 8 major holdings as of November of 2020, however, these are subject to change without notice. The methodology for weighting the holdings are as described below. United States Treasury BDS 2% occupies 17.46 percent of the market value of the fund at $120,808,200 with 111,360,000 shares. This is the most heavily weighted asset. United States Treasury NTS follows in 4 different maturity/rate designations, followed by SPDR S&P CLL OPT, 6/21 265, SPDR S&P OPT 1/20 283, United States Treasury NTS 0.125%, followed by cash and other which occupies 0.23 percent of the fund.

Can you lose money on a Swan ETF investment?

You can lose money on any investment made on futures, stocks, or ETFs. Investments always represent a gamble, but some are created to mitigate the chance of loss in a downturn. This is in part why Swan ETFs are attractive to investors who are interested in expanding their long-term investment portfolios with this type of equities based diversification.

Should you invest in a Swan ETF?

As with any decision to invest, it is wise to consult with a competent and trusted financial advisor to determine if this type of strategy is suitable for inclusion in your investment portfolio. A Swan ETF may be the best option for everyone. A few things to consider are your short and long-term financial goals, the amount of investment you plan to make, and how well this type of investment will fit into your current portfolio. The question of whether or not to invest in a Swan ETF is a matter that is best discussed with your financial advisor after carefully weighing the pros and the cons. Although the Swan ETF is generally a good choice for those seeking long term investment strategies for generating residual income, comparisons with your current investments to ensure that it adds to the diversity of the existing portfolio.

Allen Lee

Written by Allen Lee

Allen Lee is a Toronto-based freelance writer who studied business in school but has since turned to other pursuits. He spends more time than is perhaps wise with his eyes fixed on a screen either reading history books, keeping up with international news, or playing the latest releases on the Steam platform, which serve as the subject matter for much of his writing output. Currently, Lee is practicing the smidgen of Chinese that he picked up while visiting the Chinese mainland in hopes of someday being able to read certain historical texts in their original language.

Read more posts by Allen Lee

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