In the latest episode of Behind the Ticker, Brad Roth engages with Simeon Hyman from ProShares, delving into the intricate world of ETFs and the innovative strategies behind them. Hyman, with over three decades of experience in asset and wealth management, discusses his role at ProShares, a firm that manages around $65 billion across various ETF solutions. The conversation highlights Hyman's personal interests, such as music and outdoor activities, providing a glimpse into the individual behind the professional expertise.A significant focus of the episode is on ISPY, ProShares' unique covered call ETF that leverages daily options, a novel approach aiming to optimize investor returns while generating income. Unlike traditional monthly covered call strategies that might cap gains early in the month, ISPY's daily options strategy seeks to capture the full potential of the S&P 500's performance. Hyman elaborates on the competitive yield and monthly distribution of ISPY, positioning it as an attractive option for investors looking to incorporate income generation into their equity portfolios. He also addresses the risk profile associated with ISPY, aligning primarily with the S&P 500, and outlines how the ETF can fit into investors' core equity holdings.The conversation also touches on the broader ETF market, with Hyman speculating on the future of covered call ETFs and ProShares' commitment to innovation. For listeners interested in the intersection of investment strategy and innovation within the ETF space, this episode provides valuable insights into one of the leading firms in the industry and their approach to creating investment solutions that meet the evolving needs of investors.
Deeper Dive: Insights from the Full Conversation
Beyond the headline strategy, the full conversation between Brad and Simeon Hyman covered several additional themes worth highlighting for advisors and investors.
On Process and Philosophy
We manage, as I said, about $65 billion of funds in the ETF structure, and we have a range of solutions. Some may be familiar with our leverage and inverse funds that are very valuable for folks who are looking to either hedge their portfolio as they get particular exposures. And then we also have a very important, more classic buy and hold business. Among the flagships, there are a suite of dividend growth ETFs, including ticker and OBL, the S&P 500 dividend aristocrats that some of your listeners may have heard of.
And we think those classic dividend growers are certainly a place where people are returning their attention to. I mean, it was kind of a weird year over the last two years. Equal weight has been left behind. A lot of different places in the market. Like value have also been left behind. So I agree with you. I think that that could be a place where investors start to be looking and it putting some some of their asset allocation dollars.
Market Context and Positioning
Before we get started, can you tell me a bit about your background and how you ended up year at ProShares? Sure, I've been in the asset and wealth management business for about 30 years, and I've been at ProShares over a decade, ProShares is a leading ETF provider. We've got about $65 billion in funds across a range of solutions, and I just love the opportunity to be part of 21st century solutions at an innovative firm. So what about outside of work?
You don't have unlimited exposure. So that's where they're called a covered call. And that's been a popular income generating strategy for folks because you get money for selling this call option. But many folks, I think have forgotten about the other piece. You're selling away the upside. And so it's it is a yield play. What type of yield can invest investor expect to generate with a product like yours? So let me first start with the traditional strategy. A traditional monthly covered cover call strategy writes a call once a month.
So by writing these on a daily basis, the S&P 500. And this is an index strategy. I know wake up in the morning and decide how to do this. This is the S&P 500 daily covered call index that we track in ice buy. But it indeed has risk similar to the S&P 500. And look, the 10 year treasury is now at 4%. If stocks go down, they're likely going to go down because there's a recession. In which case, we are likely to finally have bonds do their diversifying job.
Notable Insights
"We've got about $65 billion in funds across a range of solutions, and I just love the opportunity to be part of 21st century solutions at an innovative firm."
"And the challenge there is let's say you sell away the right for the upside of your stock."
Key Takeaways
- Unlike traditional monthly covered call strategies that might cap gains early in the month, ISPY's daily options strategy seeks to capture the full potential of the S&P 500's performance.
- The conversation explores important themes in fixed income relevant to today's advisor landscape.
- The conversation explores important themes in options strategies relevant to today's advisor landscape.
What This Means for Advisors
For financial advisors evaluating options for client portfolios, this conversation with Simeon Hyman highlights important considerations around income investing. Understanding the strategy behind each fund—not just the ticker—helps advisors make more informed allocation decisions and better communicate the rationale to clients.
The themes of income investing and fixed income discussed in this episode are particularly relevant in the current market environment, where advisors are increasingly looking for differentiated solutions that go beyond traditional benchmarks.
Listen to the Full Episode
This article is based on an episode of Behind the Ticker, hosted by Brad Roth, Founder and CIO of THOR Financial Technologies. For the full conversation with Simeon Hyman, including additional nuances and details, listen on Spotify, Apple Podcasts, or watch on YouTube.