In a recent episode of Behind the Ticker, Mike Loukas, CEO of TrueShares, shared insights into the firm’s journey and the unique approach behind their ETFs, including their latest launches, QBUL and QBER. Loukas, with over 30 years of experience in the financial industry, founded TrueMark Investments in 2019 with the purpose of establishing TrueShares as a solutions-based ETF platform. TrueShares aims to take traditional active strategies and institutional hedging techniques and incorporate them into ETFs that offer investors smarter portfolio construction tools.
About Mike Loukas and TrueShares
Loukas explained that TrueShares’ ETF lineup started with fundamental active management products and expanded to include thematic and structured outcome ETFs. Their defined outcome or buffered ETFs have been popular among investors seeking downside protection while maintaining exposure to equity growth. Most recently, the firm launched QBUL and QBER, two quarterly resetting hedged equity ETFs designed to offer principal protection with directional market exposure.
Investment Strategy and Approach
QBUL aims to capture market gains beyond a 5% threshold within a quarter while maintaining treasury-level downside protection. In contrast, QBER generates positive returns when the market drops by more than 5%. Both funds use a structure where principal is invested in treasuries, and the yield is used to purchase out-of-the-money call options (for QBUL) or put options (for QBER). This approach ensures low risk exposure with the potential for asymmetric returns based on market movements.
Loukas highlighted the flexibility of these ETFs within a portfolio, explaining that they can be used as standalone investments or blended with other asset classes to create diversified, risk-adjusted strategies. Advisors can use QBUL in bullish markets to enhance upside potential while maintaining principal security, and QBER in bearish markets to hedge against significant declines without taking on the risks associated with shorting the market.
Deeper Dive: Insights from the Full Conversation
Beyond the headline strategy, the full conversation between Brad and Mike Loukas covered several additional themes worth highlighting for advisors and investors.
On Process and Philosophy
On the other direction to bear, same concept, you know, if the market drops more than five percent and a three month period, you will start to generate a positive return from cue bear in that band between plus five and negative five for the two strategies, your flat, your treasury. So it's, it's really a more versatile tool, I think, then what we typically see out there, it's meant to allow someone constructing a portfolio to blend it with offered ETFs, blend it with long-only equity exposure, blend it with cash.
So if you look at our structured outcome product lines, if you look at offer ETFs in general, right, particularly the equity-based ones, you have a thought process behind them is people still want exposure to directional market moves. They still want exposure to the growth characteristics of large gap equities, for example. But they want to mitigate the downside and they're willing to give up some of that upside potential for downside mitigation. And so those are great, you know, we have a series of neural lots out there.
Market Context and Positioning
So cue ball, it would be look, if you've got a market move that's north of five percent in a quarter, then cue ball kicks in. And your downside is that of holding a treasury. So you've got this opportunity to say, like, I have this risk tolerance. If the market booms in a quarter, which historically it does a heck of a lot more often than we think, I want to be able to participate in some of that, but I can't take on the risk.
And it comes down to conviction on market direction, right? So, if you're surely establishing a risk tolerance, and you've got a 64 year or some other asset allocation, that is meant to be an all-weather portfolio, you own both. You want a little bit in both, because what you're doing is you're, you're covering both tails. And if the market's up, it's going to magnify your right tail.
We have an AI and deep learning product that's been out there since 2020. Pretty concentrated, long only 20 names, 21 names in the portfolio. And then we started to expand from there and we put out obviously our structured outcome products are defined outcome or poverty ETFs as they're commonly known. We launched our first of those back in 2020 as well. So we've got a dozen of those out there. We started to build out our income and yield suite.
Notable Insights
"So, the beauty of having both from portfolio, he can toggle back and forth to match up with your risk tolerance or your expected market return."
Key Takeaways
- In a recent episode of Behind the Ticker, Mike Loukas, CEO of TrueShares, shared insights into the firm’s journey and the unique approach behind their ETFs, including their latest launches, QBUL and QBER.
- TrueShares aims to take traditional active strategies and institutional hedging techniques and incorporate them into ETFs that offer investors smarter portfolio construction tools.
- Most recently, the firm launched QBUL and QBER, two quarterly resetting hedged equity ETFs designed to offer principal protection with directional market exposure.
- QBUL aims to capture market gains beyond a 5% threshold within a quarter while maintaining treasury-level downside protection.
What This Means for Advisors
For financial advisors evaluating options for client portfolios, this conversation with Mike Loukas highlights important considerations around active management. 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 active management 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 Mike Loukas, including additional nuances and details, listen on Spotify, Apple Podcasts, or watch on YouTube.