Zero-Day Options ETFs, Quality Factor, & Securitized Income

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On this episode of ETF Prime, host Nate Geraci speaks with a trio of individuals discussing several different topics. His guests include VettaFi’s Dave Nadig, who goes in-depth on a plethora of subjects including the launch of the first zero-day options ETF. Geraci also speaks with Astoria’s John Davi, who talks about the Astoria US Quality Kings ETF (ROE). Geraci closes by speaking with Fort Washington Investment Advisors’ Laura Mayfield, who discusses the management of two Touchstone ETFs.

Zero-Day Options ETFs

To open the podcast, Geraci speaks with VettaFi’s Dave Nadig about the recent launch of the first ETF holding 0DTE options. Geraci first highlights the fund itself, which is the Defiance Nasdaq 100 Enhanced Options Income ETF (QQQY). He also points out that Defiance has also recently produced the S&P 500 Enhanced Option Income ETF (JEPY) following the release of QQQY. Nadig then jumps into the conversation by explaining the topic as a whole, and its prevalence in the markets recently.

“These daily options have become a very large part of trading in the most liquid equity names,” he said.

Nadig highlights companies like Tesla and Nvidia as ones that have been prevalent when investors are using this strategy. He also says that the index side has seen this strategy as well. Nadig believes that this strategy has become “the honey pot for speculators.” He mentions that it has really exploded recently and highlighted Robinhood and the pandemic as contributing factors. The pair then go in-depth, continuing to break down the recent launch of QQQY, and their own expectations for this style of ETF.

ETFs Holding IPOs

The conversation then shifts gears when Geraci begins to discuss ETFs holding IPOs. He highlights that September has been the second-best month for IPOs. Geraci then asks Nadig for his overall thoughts on the health of the IPO market as he names several companies that have recently filed for IPOs.

“I would say this it is OK; we should point out that IPOs are off still from last year,” he said.

Nadig points out that despite the recent uptick of IPOs, he wouldn’t say that this is a market that is taking off, but it is still doing fine overall. However, Nadig points out that the Renaissance IPO ETF (IPO) is beating the S&P 500 significantly this year. He mentions that he thinks investors shouldn’t look at IPOs as an asset class, but if investors are truly interested, the IPO ETF is a solid place to start. Nadig then goes in-depth into how ETF issuers go about including IPOs in their funds.

In addition, Nadig and Geraci discuss ETF flows, as well as themes and strategies to watch moving forward.


Geraci then brings on John Davi, who is the founder and CIO at Astoria Portfolio Advisors. He highlights that the company is currently overseeing nearly $1.5 billion in assets, and the firm currently has two ETFs. Those are the AXS Astoria Inflation Sensitive ETF (PPI) and the recently launched ROE ETF. Davi highlights that he believes Astoria offers a unique value proposition to the market. He thinks a lot of his peers touch on only macro or quant strategies.

“We like to say we are the intersection of macro plus quant, and then we do have a liquid overlay,” he said.

The pair then discuss the ROE ETF by highlighting how the fund is actively managed, and that it focuses on higher quality stocks. Davi said that his firm became uncomfortable with some of the exposures they were getting through several different asset classes, and when that was coupled with other economic concerns, it led them to launch the ROE ETF. Davi closes the segment by going in-depth on the intricacies of ROE, and his firm’s model portfolios.

Touchstone ETFs

Geraci closes the podcast by speaking with Laura Mayfield of Washington Investment Advisors about a number of different topics. She is a portfolio manager for two Touchstone ETFs: the Touchstone Ultra Short Income ETF (TUSI) and the Touchstone Securitized Income ETF (TSEC). Mayfield then explains some of the key characteristics of the two different funds she manages. She also highlights the different ways her firm tries to add value to investors; specifically, through their management of these funds. Geraci then asks Mayfield about her thoughts on active management in the fixed income space.

“The first thing I will say is that it is going to depend on the manager. We all know that past performance is not necessarily indicative of future results,” she said.

Mayfield mentions that some managers have a history of performance that supports their investment strategies, and others do not. She believes that is something that should be accounted for. Mayfield closes the conversation by diving deep into several other details regarding her firm’s thoughts on active management.