6/21/2022. The Board of Trustees (the “Board”) of Collaborative Investment Series Trust (the “Trust”) has determined that it is in the best interests of shareholders to liquidate the NextGen Trend and Defend ETF (a “Fund”), and a series of the Trust, following a recommendation by the Funds’ investment adviser, NextGen ETFs, LLC. The Board has determined to liquidate the Fund with the liquidation payment to shareholders expected to take place on or about June 29, 2022 (“Liquidation Date”).
After the close of business on June 23, 2022, each Fund no longer will accept creation orders. The last day of trading on the CBOE BZX Exchange, will be June 23, 2022. Shareholders should be aware that while a Fund is preparing to liquidate, it will not be pursuing its stated investment objective or engaging in any business activities except for the purposes of winding up its business and affairs, preserving the value of their assets, paying its liabilities, and distributing its remaining assets to shareholders.
Shareholders may sell their holdings of a Fund on its Exchange until market close on June 23, 2022 and may incur typical transaction fees from their broker-dealer. The Fund’s shares will no longer trade on its Exchange after market close on June 23, 2022, and the shares will be subsequently delisted. Shareholders who do not sell their shares of the Fund before market close on June 23, 2022 will receive cash equal to the amount of the net asset value of their shares, which will include any capital gains and dividends, in the cash portion of their brokerage accounts, on or about the Liquidation Date.
Shareholders generally will recognize a capital gain or loss equal to the amount received for their shares over their adjusted basis in such shares. You may wish to consult your tax advisor about your particular situation. If you have questions or need assistance, please contact your financial advisor directly or a
Fund at (866) 505-1107. This Supplement and the Prospectus dated June 17, 2022, provide relevant information for all shareholders and should be retained for future reference. Both the Prospectus and the Statement of Additional Information have been filed with the Securities and Exchange Commission and are incorporated by reference and can be obtained without charge by calling the Fund at (866) 904-0406.
Distributor: Foreside Fund Services, LLC
Source: Collaborative Investment Series Trust
For further information: Chuck Brokop at chuck@nextgenetfs.com
TRDF
Liquid Alternative Long/Short ETF
Strategy Characteristics
Predictable Correlation
Predictable Correlation
Our signals are centered around price movements on the S&P 500 Index. Because of this, when large cap price levels are declining TRDF shorts the index and offers a negative 1.0 correlation to the S&P 500 index…
Read MoreThis can lead to predictable inverse correlations during tail risk events and periods of heightened volatility by investing into liquid inverse S&P 500 ETFs when our signals are bearish. Historically, portfolio diversification includes spreading risk across a basket of asset classes with mathematically lower correlations than 1.0. The problem is this does not capture the empirical evidence that correlations among asset classes increase during tail risk events, right when you need that diversification most.
Tail Risk Protection
Tail Risk Protection
Most Trend Following and “defensive” strategies rotate into safe-haven assets during a market downturn. TRDF becomes defensive during these periods of modest market corrections as well, however, when the empirical evidence indicates the market downtrend should persist and worsen, we then rotate the portfolio into our short position.
Read MoreOur ability to short the index when other strategies invest in treasury bills or cash has the potential to generate outsized positive returns during market selloffs (Crisis Alpha). Rotating to cash doesn’t offer negative correlation in tail-risk events, but being short the index mathematically offers near perfect negative correlation.
Lower Fee Structure
Lower Fee Structure
Traditional hedge funds charge 2.0% in management fees, and 20% in performance fees. In the early years of hedge funds markets were not as efficient and prices did not reflect new information almost instantaneously as they do now as technology continues to evolve the industry…
Read MoreManagers could use skill to gain an edge in markets and create alpha for their investors, justifying the fees. As more managers came into the space, this led to the inevitable degradation of alpha. With time, what was once alpha became beta due to innovation and competition. What has resulted is advisors pay 2% and 20% for essentially low volatility beta exposures, which can be quantitatively replicated at much lower fees given innovation in technology and fund structures. At substantially lower fee structures, this has the potential to create alpha above traditional hedge funds, net of fees.
Potential Tax Advantage
Potential Tax Advantage
ETFs offer tax benefits relative to limited partnerships for some investors. In traditional hedge funds, the buying and selling of individual securities may trigger capital gains taxes passed through to the investor on their K-1.
Read MoreThanks to a long-standing ETF rule, these taxes can potentially be avoided or significantly reduced through “basket trading” giving the ETF structure a potential leg-up on traditional hedge fund structures for investors that focus on net, after-tax return characteristics of an asset class.
Liquidity Preference
Liquidity Preference
TRDF is an actively traded ETF providing investors on-demand liquidity. This can benefit investors seeking the diversification benefit of alternatives such as hedge funds, but are averse to holding illiquid assets and locking up capital for multi-year periods.
TRDF is an actively traded ETF providing investors on-demand liquidity. This can benefit investors seeking the diversification benefit of alternatives such as hedge funds, but are averse to holding illiquid assets and locking up capital for multi-year periods.
Behavioral Alpha
Behavioral Alpha
Loss AversionResearch conducted by Daniel Kahneman and Amos Tversky (Kahneman & Tversky 1979) proved that the bad feeling of a financial loss is twice as powerful as the positive feeling of a financial gain. When our trend following strategy shorts the market during tail risk events, it offers investors positive returns during a period where they’d traditionally be panicking.
Classic Retail Mistake 🡪 Read MoreWhen people don't have a pre-determined plan for various market events, they can make poor decisions as emotion and panic overrides the logical brain. This typically results in selling their portfolio when markets have already lost substantial value. The subsequent action is to avoid re-investing until the regret of missing out on the recovery overrides their fear of losses which typically occurs after markets have reached substantially higher levels. This is captured quite well in the capital destruction process diagram, which can be found by clicking here
How It Works
Portfolio Positioning
When we are Short
Trend is Negative
Volatility is Rising
When we are Long
Trend is Positive
Volatility is Declining
TRDF Characteristics
Negative Downside Capture
Systematic
Liquid Alternative
Positive Upside Capture
Imperfect
Not "Low Vol"
Portfolio Positioning
Trend is Negative
Trend is Positive
Volatility is Rising
Volatility is Declining
TRDF Characteristics
Systematic
Imperfect
Liquid Alternative
Not "Low Vol"
US Stock Market Crash Coming?!
