With doubts over near-term U.S. growth and inflationary pressures likely not going away anytime soon, demand is on the rise for products that may help investors ride out potential volatility.
One solution advisors frequently turn to in the face of rising inflation is gold. The precious metal has long served as a vehicle for weathering the risks of inflation for a multitude of factors. Not only does gold function well as a store of value, but its limited supply and lower currency correlation helps the precious metal retain its luster regardless of how the economy is performing.
That said, gold is not the only investment choice that looks to offer a store of value, limited supply, and low currency correlation. All of these factors are present within bitcoin as well, which has ignited a years-long debate over whether folks should be looking to gold or bitcoin during periods of inflationary risk.
Both gold and bitcoin can certainly perform well as an inflationary hedge, but there are differences between the two, especially regarding long-term growth potential and volatility. In fact, these differences could actually help highlight the advantages of pairing gold and bitcoin. By allocating into both gold and bitcoin, investors can tap into the perks of both investments while diversifying into two distinct hedges against potential inflation.
The Calamos Bitcoin 90 Series Structured Alt Protection ETF – July (CBXY) can help investors gain bitcoin access through the versatile ETF wrapper. CBXY uses an options strategy to gain access to bitcoin’s price performance, up to a predetermined upside cap. When the fund launched in July, that cap began at around 24%.
Meanwhile, a key advantage of CBXY comes through its promise of downside security. Investors that pay its fees and expenses have their overall loss limited to 10% over the fund’s outcome period, regardless of how far bitcoin may be in the negative. Given how drastic bitcoin drawdowns can be at times, this level of risk control can be valuable. This is especially true when employing bitcoin as an inflation hedge.
This strategy gives CBXY a good use case as a complementary piece for a gold strategy within an advisor’s portfolio. The fund may help investors hedge against inflation while offering volatility-adverse bitcoin growth, giving it extra value as a risk management tool. When slotted in with a gold strategy, advisors and investors may benefit from two distinct inflation hedges, with each hedge bringing their own distinct strengths to the table.
For more news, information, and strategy, visit the Crypto Content Hub.
Before investing, carefully consider a Fund’s investment objectives, risks, charges and expenses. Please see the prospectus and summary prospectus containing this and other information which can be obtained by calling 1-866-363-9219. Read it carefully before investing.
The Funds seek to provide investment results that, before taking fees and expenses into account, track the positive price return of the CME CF Bitcoin Reference Rate – New York Variant (“BRRNY”) (“Spot bitcoin”) up to a predetermined upside cap (the “Cap”) while seeking to protect against 100%, 90% or 80%, respectively, of losses (before total fund operating fees and expenses) of Spot bitcoin over a period of approximately one (1) year (the “Outcome Period”). The Funds will not invest directly in bitcoin. Instead, the Funds seek to provide investment results that, before taking total fund operating fees and expenses into account, track the positive price return of Spot bitcoin by investing in options that reference the price performance of one or more underlying exchange-traded products (“Underlying ETPs”) which, in turn, own bitcoin and/or one or more indexes that are designed to track the price of bitcoin (“Bitcoin Index”).
The Target Outcome may not be achieved, and investors may lose some or all of their money. The Funds are designed to achieve the Target Outcome only if an investor buys on the first day of the Outcome Period and holds a Fund until the end of the Outcome Period. While the Funds seek to provide 100%, 90% or 80% protection against losses experienced by the price of Spot bitcoin for shareholders who hold Fund Shares for an entire Outcome Period, there is no guarantee a Fund will successfully do so. If a Fund’s NAV has increased significantly, a shareholder that purchases Fund Shares after the first day of an Outcome Period could lose their entire investment. An investment in the Funds is only appropriate for shareholders willing to bear those losses. There is no guarantee the Capital Protection and Cap will be successful, and a shareholder investing at the beginning of an Outcome Period could also lose their entire investment.
An investment in the Funds is subject to risks, and you could lose money on your investment in a Fund.
There can be no assurance that a Fund will achieve its investment objective. Your investment in a Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. The risks associated with an investment in a Fund can increase during times of significant market volatility. The Funds also have specific principal risks, which are described below. More detailed information regarding these risks can be found in the Funds’ prospectus.
Investing involves risks. Loss of principal is possible. The Funds face numerous market trading risks, including authorized participation concentration risk, underlying ETP risk, cap change risk, capital protection risk, capped upside risk, cash holdings risk, concentration risk, clearing member default risk, correlation risk, costs of buying and selling fund shares, counterparty risk, derivatives risk, equity securities risk, FLEX options risk, interest rate risk, investment in a subsidiary, investment timing risk, liquidity risk, management risk, market maker risk, market risk, new fund risk, non-diversification risk, options risk, OTC options risk, position limits risk, premium-discount risk, secondary market trading risk, sector risk, tax risk, trading issues risk, U.S. Government security risk, U.S. Treasury risk, and valuation risk. For a detailed list of Fund risks see the prospectus.
Digital Assets Risk: The Bitcoin network was first launched in 2009 and bitcoins were the first cryptographic digital assets created to gain global adoption and critical mass. Although the Bitcoin network is the most established digital asset network, the Bitcoin network and other cryptographic and algorithmic protocols governing the issuance of digital assets represent a new and rapidly evolving industry that is subject to a variety of factors that are difficult to evaluate. Moreover, because digital assets, including bitcoin, have been in existence for a short period of time and are continuing to develop, there may be additional risks in the future that are impossible to predict as of the date of this prospectus. Digital assets represent a new and rapidly evolving industry, and the value of the Underlying ETPs’ shares depends on the acceptance of bitcoin. The realization of one or more of the following risks could materially adversely affect the value of the Underlying ETPs’ shares.
100%, 90% or 80% capital protection is over a one-year period before fees and expenses. All caps are predetermined.
Cap Rate – Maximum percentage return an investor can achieve from an investment in a Fund if held over the Outcome Period.
Protection Level – Amount of protection a Fund is designed to achieve over the Days Remaining.
Outcome Period – Number of days in the Outcome Period.
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