Matt Kaufman, senior vice president and head of ETFs at Calamos Investments, was recently a guest on Benzinga's All-Access.
Calamos Investments is a 45-year-old risk management firm and one of the largest convertible bond managers in the U.S. The company provides investors with access to convertible securities, alternative funds and a growing number of active and structured outcome ETFs, including what it says is the world's first 100% protected ETFs tied to the S&P 500, Nasdaq 100, Russell 2000 and even Bitcoin.
Calamos Investments is a 45-year-old risk management firm and one of the largest convertible bond managers in the U.S. The company provides investors with access to convertible securities, alternative funds and a growing number of active and structured outcome ETFs, including what it says is the world's first 100% protected ETFs tied to the S&P 500, Nasdaq 100, Russell 2000 and even Bitcoin.
Category
š
NewsTranscript
00:00And it is my pleasure to welcome in the senior vice president, head of ETFs at CalMOS Investments, Matt Coffin.
00:10Wonderful to be with you today, Matt.
00:11Dan, thanks for having me. Always a pleasure.
00:14The dream is alive, my friend.
00:15Let's see if you can give the peeps an overview of CalMOS.
00:20Yeah, CalMOS is a risk manager.
00:22We've been at this for about 45 years.
00:25We started just a few years after the options market opened in Chicago.
00:28So we've been doing options-based strategies for quite a long time.
00:32Started off in the convertible bond space.
00:35So if you're familiar with converts or maybe not familiar, it combines a corporate bond with an option to that corporation.
00:42We're the largest converts manager in the country.
00:45We've got a lot of alts funds.
00:46That's our bread and butter.
00:48We're in the ETF space now, a lot of active ETFs, a lot of outcome-based ETFs.
00:53And that's where we're operating in these days.
00:56Yeah, Matt, 45 years.
00:58That's nothing to sneeze at, man.
00:59That's a lot of history.
01:00So it's very impressive.
01:01You guys know what you're doing.
01:02Let's talk about what kind of products you offer.
01:05Yeah, for sure.
01:06In the ETF space, we offer a lot of structured outcome ETFs.
01:09So we had the world's first 100% protected ETFs.
01:14It gives you exposure to markets like the S&P 500, NASDAQ 100, Russell 2000.
01:20Now you can get Bitcoin exposure with a safety net.
01:23So that's how we're operating in the ETF space, offering exposure to those markets with 100% protection.
01:31So we're seeing people de-risk some of their equity exposure.
01:34We're seeing them tie their cash now to the equity markets or a bit of a mind bender.
01:39But you can now tie cash to the price of Bitcoin and get no downside risk, but get the upside of Bitcoin to about 12%, which is better than a risk-free rate that you might get otherwise.
01:50And then we have a lot of other ETFs in the market as well.
01:52CanQ is one of my personal favorites.
01:55Gives you equity upside to the NASDAQ 100 with a bond floor.
02:00And so that product has held up tremendously well through the environment that we're in.
02:05Working on a few other ideas as well.
02:07We're excited to bring the market.
02:09And then we have interval funds.
02:10We have mutual funds.
02:11So we've got the full gamut here.
02:13Yeah, as you mentioned, great stuff to be involved in with very too much of those times as we're going through right now.
02:18And Matt, as I love to say, it is an incredible time to be alive.
02:22When you look at how innovation as well as risk management and client focus define your approach, what would you say?
02:29Yeah, I think looking back over the last 30, 40 years where we had the actively managed discretionary mutual fund was kind of the way folks would approach their investing.
02:40And now we're seeing a lot of financial advisors, investors say, just give me the tools.
02:45I want to make my own allocation decisions.
02:48And so that's where you see this proliferation of ETFs in the marketplace, you know, into the thousands of ETFs.
02:54So you're right.
02:55It is a great time to be an investor, a great time to be alive.
02:58There are a tremendous amount of tools.
03:00You know, now you can actually buy products and invest in products that can tell you your upside, your protection level, and how many days you have to hold that before you even invest a single dollar.
03:12So, you know, what's the old way?
03:14The old way is to, you know, batten down the hatches and just get the volatility that the market delivered to you.
03:20You don't have to do it that way.
03:21You can dial in the risk tolerance that you're looking for.
03:25So we're seeing all of these types of products make their way into the market.
03:29We're seeing some of the mainstream predictions see this type of space growing to well over $600 billion.
03:36You know, I think it's going to be even bigger than that.
03:38I think it's really creating a sea change in the way that people are approaching their investing.
03:43Oh, it certainly is.
03:44And if we can, let's dive a little deeper into how your upside and the downside ETFs work.
03:49And have you seen much client adoption?
03:52Yeah, absolutely.
03:52The way that we like to go about this and explain it is just to pretend like I give you $100.
03:58So, you know, Dan, if I gave you $100, we could recreate this exposure.
04:03Take me for that $100, by the way.
04:04Yeah, there you go.
04:04You're going to give it back to me eventually.
04:06So we'll spend about $98 of those dollars on our exposure.
04:11So we're going to buy what's called a zero strike call.
04:14And your listeners are deep in the weeds on this stuff.
04:17So it's a zero strike call.
04:18It gives you the upside and downside of the market, like the S&P 500.
04:22Then we're going to buy protection.
04:24So that is a put option that's going to cost about $4 of your dollars.
04:28So we've spent $98 on your participation.
04:31We've spent $4 on the protection.
04:32So we overspent.
04:33Spent $102.
04:34So now we have to sell off some upside.
04:37We're going to sell an out-of-the-money call to collect $2 of premium or enough to be able to make that package equal $100.
04:45And then the strike price on that sold call determines your upside cap rate.
04:49So that's how we structure all of these products.
04:52That's a three-legged options trade.
04:54And those options prices sit inside the ETF.
04:56So it flows up to a single price.
04:59And now you can go to our website.
05:01You can buy in at the beginning, get that full outcome period performance.
05:04Or you can go to our website, see what the price of that is trading at.
05:07And you can know exactly what your opportunity is, what's your upside, what's your downside, how many days are left.
05:14You can make a decision.
05:15Is this a good idea to buy into this or invest in this today or not?
05:19You explained that beautifully.
05:20Do I have to give the $100 back?
05:21Can I keep it for a minute and then I'll give it back to you?
05:23Yeah, there you go.
05:24Let's do that.
05:25Listen, we talked about, obviously, it's a very interesting time right now.
05:30When you look at how you foresee this current tariff volatility working out, what are you advising your clients to do?
05:36Yeah, I think personally, this era of easy monetary policy really seems to be behind us.
05:44For more than a decade, investors really grew accustomed to this near zero rate interest rate environment.
05:50That's not the case anymore.
05:53Some of those years, it would seem like we had an endless money supply too.
05:56But I want to go out on a limb.
05:58I'll say that that chapter is closed and we're in a bit of a new economic reality here.
06:03But we're stuck against this environment where we have the desire and the need to bring inflation down.
06:10We never really hit that 2% target.
06:12But it's butting up against policies that are, on the short term, theoretically, inflationary.
06:18So I think that's the environment that traders and investors are finding themselves in.
06:23It's a bit of a conflict.
06:24And I think that's where you're seeing volatility.
06:26You know, you've got the warm air loft and the cold air coming together and it's creating some storms.
06:31And so I think that's that's the environment that we're in.
06:34You know, thankfully, if we bring it full circle, you know, a lot of the investment products that are in the market today, you know, can actually control volatility and that can benefit you.
06:44And so, you know, we're seeing people move into these types of defined outcome ETFs in order to gain growth.
06:50But with protection, you don't have to sit on the sidelines anymore.
06:54Beautifully said.
06:55And as you said, it really is a great time to get involved.
06:58Matt, it was an absolute pleasure talking with you today.
07:00Thank you so much for your time.
07:01Great to see you.
07:02Thanks, Dan.
07:02You too.