$Convergence Long/short Equity ETF(CLSE.US)

CLSE

Long/Short Equity ETF

Integration of "Going Long on Strong Stocks, Shorting Declining Stocks"

The Long/Short Equity ETF aims to generate excess returns through a net long portfolio. This ETF goes long on stocks with strong fundamentals and shorts stocks with declining or deteriorating business models.

The Convergence Long/Short Equity ETF aims to provide higher potential returns than traditional investment approaches while reducing risk. The fund is committed to achieving more significant and stable excess returns (alpha) throughout the market cycle by combining its long and short positions through its unique fundamental ranking methodology. The goal of the Convergence Long/Short Equity ETF is to pursue long-term capital appreciation while minimizing volatility.

Investment Strategy

The Convergence investment process integrates the advantages of quantitative and fundamental methods. This "quantamental" investment approach combines experienced fund managers' bottom-up fundamental analysis with tools and techniques for efficiently organizing vast amounts of investment data. Unlike traditional fundamental-based stock selection methods, the quantitative approach can cover a broader range of data and improve data utilization. The Convergence investment method employs a dynamic process to achieve excess returns (Alpha) from long and short holdings through stock selection and fundamental adjustments. The Convergence dynamic process measures which indicators are rewarded and which are penalized. This analysis is used to rank the attractiveness of stocks within each sector. Convergence systematically measures these fundamental preferences based on characteristics deemed most effective in identifying securities with the greatest potential for excess returns.

Shortened Due Diligence

Stocks targeted for shorting must pass multiple built-in risk control criteria within the Convergence investment process if their fundamental scores meet favorable shorting indicators. The size of short positions is subsequently reduced to lower idiosyncratic risk. Stocks with lower borrowing costs are prioritized over those with higher borrowing costs but greater controversy. We monitor short positions to minimize investment in stocks with a high proportion of short holdings. These measures help reduce the risk of shorting companies with weak or declining fundamentals.

Diversified Alpha Sources

This strategy uses shorting as an active means of generating excess returns, not merely as a portfolio hedge. We believe that pricing biases may exist in the stock prices of companies in public markets, creating investment opportunities for both top-ranked long and short positions. A portfolio holding both long and short positions has a positive expectation for risk-adjusted excess returns.

https://www.investcip.com/etfstrategies.html