Compare the efficiency of the ETF and total return swap TAA implementation alternatives from the perspectives of
Question:
Compare the efficiency of the ETF and total return swap TAA implementation alternatives from the perspectives of capital commitment, liquidity, and tracking error.
Clive Staples is a consultant with the Leedsford Organization (Leedsford), a boutique investment consulting firm serving large endowments and private foundations. Leedsford consults on tactical asset allocation (TAA) program development, implementation, and ongoing TAA idea generation.
Staples has just completed his quarterly client review of the Narnea Foundation. Based on the Foundation’s current asset allocation and Leedsford’s updated fair value models, Staples believes there is an exploitable TAA opportunity in US large-cap growth stocks. He recommends a 2% overweight position to the US equities policy allocation either through an unlevered ETF or total return swap exposures to the Russell 1000 Growth Index.
Step by Step Answer:
Comparing Efficiency of ETF and Total Return Swap TRS for TAA Heres a breakdown of how Exchange Traded Funds ETFs and Total Return Swaps TRS compare f...View the full answer
