There's no shortage of risks for investors to worry about: Economic slowdowns, geopolitical conflict and inflation. But some of the best ETFs and alternative investments might be a way to diversify, says Greg Bassuk, chief executive officer of AXS Investments.
Bassuk aims to give every individual investor access to some of the best ETFs and mutual funds in asset classes outside of plain vanilla stocks.
Founded more than two years ago, AXS has gathered $1.4 billion in assets under management. The company offers 23 funds focused on alternative investments. Those include 12 mutual funds and 11 ETFs. An additional 20 ETFs are in registration for future launches.
The New York-based asset manager isn't just growing by launching funds. It's also buying some of the best ETFs and mutual funds. For example, it recently acquired AXS Change Finance ESG ETF, the first certified carbon-neutral ETF.
AXS offers six alternative product types. Those are liquid alternatives, alternative equity and alternative income. But also sustainable alternatives (nontraditional ESG strategies), digital assets and AXS Alternative Strategy ETFs. The firm also offers two mutual funds that expose investors to private equity and venture capital.
Bassuk, one of the firm's founders is no stranger to alternative investments. Prior to AXS, he was managing director and head of liquid alternative strategies at FS Investments with $24 billion in assets under management. He also cofounded and was chief operating officer of IndexIQ, a pioneer in liquid alternative investments in ETF, mutual fund and other portfolios. New York Life Investment Management bought IndexIQ.
Bassuk tells IBD about the firm's focus and its ETF offerings.
IBD: Why did you help form AXS?
Greg Bassuk: AXS Investments was founded two years ago with the vision and mission of creating new access ("AXS" is pronounced "access") for individuals to alternative investments historically available only to institutional and ultra-high-net-worth investors. Our sole focus is to "democratize investing" by empowering individuals to diversify their portfolios with critical new access to alternatives to traditional equity and fixed income investments for enhanced portfolio outcomes.
IBD: How has the firm evolved since then?
Bassuk: The firm is ... expanding our product lineup, diversifying our investment strategies, and rolling out innovative educational initiatives for individuals and financial advisors.
As investors and financial advisors typically gravitate to certain fund structures of their choice, we have had significant success offering strategies in multiple vehicles, as well as across the liquidity spectrum, such as intraday liquid ETFs and daily liquid mutual funds. Likewise, certain investment strategies fit best within particular fund structures, often driven by liquidity, tax and other considerations.
As a pure-play provider of alternative strategies, AXS has built a robust platform for an expansive range of differentiated alternative strategies for enhanced investor outcomes. The firm's array of first-of-their-kind alternative strategies has expanded substantially since our inception.
IBD: What are some examples?
Bassuk: Within alternative equity, AXS Astoria Inflation Sensitive ETF offers the industry's only ETF that allows investors to both protect against, and profit from, periods of rising prices.
Within alternative income, AXS First Priority CLO Bond ETF invests in 100% AAA-rated floating-rate collateralized bond obligations (CLOs). It has the highest-rated, shortest duration bonds, and the yield will continue to increase as the Fed raises interest rates. Historically, pensions, endowments and foundations could access these highly robust fixed-income exposures, but the AAA ETF is the first-of-its-kind ETF for individual investors to achieve all of these fixed-income objectives in a single ETF.
In digital assets, AXS filed to offer the AXS Bitcoin Strategy ETF and AXS Short Bitcoin Strategy ETF.
Within alternative strategy ETFs, AXS 2x Innovation and Short China Internet are first-of-their kind ETFs that just launched.
AXS is also acquiring Short Innovation, SPAC and New Issue, De-SPAC, Short De-SPAC, FOMO ETF and Revere Sector Opportunity.
IBD: What are you doing to educate investors about your ETFs?
Bassuk: We have invested heavily in data and technology to not only provide key investment education, but also to deliver that educational content across a vast range of mediums, such as videos, podcasts, webcasts, emails, blogs, white papers, and educational commentaries.
IBD: What kind of clients do you cater to?
Bassuk: As a "pure-play" provider of alternative investment strategies, our investor base is very wide-ranging: traditional alternative investments allocators, individual investors, financial advisors, family offices, TAMPs (Turnkey Asset Management Platforms), and ETF strategists.
IBD: Which AXS ETFs have performed the best in this market?
Bassuk: AXS Astoria Inflation Sensitive ETF. It has been a No. 1 top performer in its category over every time period since its Dec. 30, 2021, launch. PPI is up 14.1% YTD, while S&P 500 is down 13.5% YTD.
IBD: Which AXS ETFs have had the best inflows?
Bassuk: AXS Astoria Inflation Sensitive ETF surpassed $70 million within 70 trading days since its launch. We are averaging AUM (assets under management) growth in the ETF of about $1 million per trading day, which is a great feat for any new ETF.
AXS Change Finance ESG ETF has had positive net flows in each of the one-month, three-month, YTD and one-year periods. It has $116 million in AUM and a 5-Globe Sustainability Rating from Morningstar, which is Morningstar's highest Sustainability rating.
IBD: How do you decide to launch an ETF?
Bassuk: AXS has a very robust new product pipeline. Every fund we bring to market is based upon our core founding principle of creating new and better access for individuals to alternative investments that have been available only to institutional and ultrahigh net worth investors.
IBD: You originally started with two mutual funds, but have since expanded into ETFs — what was the reasoning behind this?
Bassuk: We still see very significant areas of white space across product vehicles that are highly ripe for innovation. Ultimately, investor demand is what drives our product priorities. And there is continued growth in demand and flows across all six of our product verticals, and across multiple vehicles that provide investment exposure to those product strategies.
IBD: What is your economic outlook?
Bassuk: Our outlook is bullish on the economy and markets longer-term, but we anticipate a very choppy roller-coaster ride of high inflation and volatility in the months ahead until there is greater consistency across economic indicators that shed more light on the timing and extent of economic stabilization and growth.
IBD: How should investors navigate the changing dynamics in the markets, such as inflation, higher rates and geopolitical instability?
Bassuk: The good news is that investment tools do exist to help investors navigate the rough ride ahead. Alternative investments not only can provide investors with continued equity market participation, but simultaneously can also provide potential risk mitigation, lower volatility and less correlation to the broader markets. Liquid alternatives provide these alternative strategies in very investor-friendly vehicles, such as ETFs, to bring even greater transparency, liquidity, and tax efficiency to individual investors.
Inflation-sensitive investments can provide protection against the pernicious impacts that inflation can have on portfolios. And they also tend to benefit in periods of rising prices, such as cyclical stocks.
(And) we believe that companies with sustainable business models, strong governance, and other key sustainability metrics represent good prospects for investors to consider. We have seen firsthand that portfolios can "do well and do good" at the same time.
