In today's turbulent markets, protecting your investments feels more crucial than ever. The Federal Reserve, tasked with steering the U.S. economy, finds itself in uncharted territory. Not only is it navigating economic uncertainty, but its leadership and independence are under scrutiny as it implements interest rate cuts. This double whammy of challenges makes traditional investment strategies feel risky. But here's where it gets interesting: a defensive approach to U.S. equities might just be the shield investors need right now. Imagine a strategy that prioritizes safeguarding your initial investment while still allowing for potential growth. That's the promise of the Calamos Phalanx Structured Protection ETF (CPSL). CPSL isn't your average ETF; it's a fund of funds, strategically investing in a laddered portfolio of Calamos S&P 500 Structured Alt Protection ETFs.
These underlying ETFs are designed with risk-averse investors in mind. They aim to mirror the performance of the S&P 500, a benchmark for the U.S. stock market, but with a crucial difference: they offer a safety net. After accounting for fees, these ETFs provide complete capital protection over a one-year period.
But here's where it gets controversial: While these ETFs protect your principal, they also cap potential upside. This means you won't fully participate in the S&P 500's soaring highs, but you'll be shielded from its devastating lows. Is this trade-off worth it in today's volatile market? That's a question every investor needs to answer for themselves.
CPSL's unique structure adds another layer of strategy. It holds 12 different Structured Protection ETFs, each starting and ending on a different month. This diversification across time horizons aims to smooth out returns and potentially capture gains in different market cycles.
Think of it like having 12 different shields, each protecting you from market fluctuations at different times of the year. This disciplined laddered approach positions CPSL as a potentially powerful tool for investors seeking a defensive stance on U.S. equities.
And this is the part most people miss: CPSL doesn't completely abandon the potential for growth. While the upside is capped, investors still have exposure to the S&P 500's upward momentum. It's a delicate balance between protection and participation, a strategy that might resonate with those seeking a more measured approach to investing.
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Important Disclosures:
Before investing, carefully consider the fund's investment objectives, risks, charges, and expenses. You can find this information in the prospectus and summary prospectus, available by calling 1-866-363-9219. Read it carefully before investing.
Investing involves risks, and you could lose money on your investment. The fund faces numerous risks, including market volatility, authorized participation concentration risk, cap change risk, capital protection risk, capped upside risk, cash holdings risk, clearing member default risk, correlation risk, derivatives risk, equity securities risk, investment timing risk, large capitalization investing risk, liquidity risk, market maker risk, market risk, non-diversification risk, options risk, premium discount risk, secondary market trading risk, sector risk, tax risk, trading issues risk, underlying ETF risk, and valuation risk. For a detailed list of fund risks, see the prospectus.
Fund-of-Funds Risk:
As a fund of funds, CPSL's performance will differ from the individual ETFs it holds. CPSL itself doesn't pursue a defined outcome strategy or provide direct downside protection against S&P 500 losses. Since CPSL typically doesn't purchase underlying ETFs on the first day of their target outcome period, it's unlikely to fully realize the stated outcomes of those ETFs. CPSL's returns are influenced by the performance of all the underlying ETFs during their respective periods, and its overall return may be lower than any single ETF or group of ETFs over a given time frame.
Additionally, CPSL's semi-annual rebalancing means it may be overweighted in certain underlying ETFs at times, exposing it more to their performance. As a shareholder in other ETFs, CPSL also incurs its share of their expenses, leading to duplicative costs for investors.
There's no guarantee that the underlying ETFs will successfully provide the intended protection. The promised outcomes are only achievable if you hold shares from the first day of the outcome period until the last day, approximately one year. Even then, there's no assurance that the outcomes will be met or that the ETFs will achieve their investment objectives.
If an underlying ETF has appreciated since the start of its outcome period, any gains in CPSL due to this appreciation are not protected. Investors could still experience losses if the underlying ETF's value drops back to its original price at the beginning of the outcome period.
Each underlying ETF has an upside return cap, limiting the maximum percentage return an investor can achieve during its outcome period, before fees and expenses. If an ETF's value nears its cap, new investors have limited potential for gains but remain exposed to downside risks. These caps can fluctuate from one outcome period to the next.
It's crucial to remember that CPSL itself doesn't pursue a target outcome strategy and doesn't provide direct downside protection. The protection is solely offered by the underlying ETFs, and CPSL may not fully benefit from their downside protections while facing limited upside potential due to the ETFs' caps.
Key Terms:
- Cap Rate: The maximum percentage return an investor can achieve from an investment in CPSL if held over the Outcome Period.
- Protection Level: The amount of protection CPSL aims to provide over the Days Remaining.
- Outcome Period: The defined length of time over which the outcomes are sought.
The S&P 500 Price Index (SPX) tracks the price return of the S&P 500 Index, widely considered a benchmark for the U.S. stock market.
Important Notes:
- Index returns, unlike fund returns, do not reflect fees, expenses, or sales charges. Investors cannot directly invest in an index.
- The S&P 500 is a product of S&P Dow Jones Indices LLC and S&P Global, licensed for use by Calamos Advisors LLC. CPSL is not sponsored, endorsed, sold, or promoted by S&P Dow Jones Indices, S&P Global, or any of their affiliates. These entities make no representations or warranties regarding the advisability of investing in CPSL or its ability to track the S&P 500.
Disclaimer:
Neither S&P Dow Jones Indices nor any third-party licensor guarantees the accuracy, timeliness, or completeness of the S&P 500 Index or any related data. They disclaim all warranties, express or implied, and shall not be liable for any errors, omissions, or delays.
Trademarks:
STRUCTURED ALT PROTECTION ETF and STRUCTURED PROTECTION ETF are trademarks of Calamos Investments LLC.
Contact Information:
Calamos Financial Services LLC
2020 Calamos Court | Naperville, IL 60563
866.363.9219 | www.calamos.com | [email protected]
2025 Calamos Investments LLC. All Rights Reserved.
Calamos and Calamos Investments are registered trademarks of Calamos LLC.
Food for Thought:
Is CPSL's focus on capital preservation and limited upside the right strategy for your risk tolerance and investment goals? In today's uncertain market, is the trade-off between protection and potential growth worth it? Share your thoughts in the comments below!
