New ETF looks to guard against volatility

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An ETF manager has launched a new managed risk fund it says will help defend investors against volatility.

BetaShares has announced the launch of its Managed Risk Australian Share Fund, trading under the ASX code AUST. The fund invests in a passively managed basket of Australian shares, generally consisting of around 200 of the largest shares on the ASX. The company said the fund would help reduce volatility and defend against losses, making it particularly suited to SMSFs, pre-retirees and retired investors.

"Investors and their advisers are increasingly being made aware of a major investment challenge - invest too cautiously and risk insufficient investment performance required to fund lifestyle purposes; invest too aggressively and risk exposure to significant losses in a market decline," BetaShares managing director Alex Vynokur said.

Vynokur said investors were drawn to shares, particularly in a low rate environment, but could be wary of the volatility of the market.

“To address this, the Fund’s risk management strategy actively monitors sharemarket volatility and, when volatility rises, applies a handbrake to reduce the impact of major market declines. It does this by reducing investors’ exposure to equities in falling markets, while still allowing participation in rising markets. The risk management strategy utilised by the Fund aims to provide investors with a smoother investment ride.”