NEW YORK--(BUSINESS WIRE)--It is no secret that energy stocks are out of favor with investors these days and have been for some time. The fossil fuel divestment trend, spurred by a now in-retreat ESG movement; investors’ negative experiences during the waning days of the “Shale Era” and COVID; and the yawning valuation gap between large- and small-cap equities spurred by massive allocations to passive investment approaches have all combined to leave a large swath of the energy equity universe dramatically undervalued when compared to their earnings potential. Where these trends persist, opportunities exist; but noting opportunity and acting upon it properly are two very different things.
For Octane Investments, this is just the sort of confluence of factors for which their value-driven investment approach was created; and today the firm is marking the launch of their first investment vehicle: the Octane All-Cap Value Energy ETF (OCTA).
OCTA, which is listed on the Nasdaq with a competitive net expense ratio of 0.30%*, is a high-conviction actively managed ETF.
The approach underpinning the fund is built on Octane’s proprietary investment “decision tree” which in this case starts with the universe of energy stocks trading on U.S. exchanges (removing companies with a market cap below $1 billion as well as any Emerging Markets and/or tar sands companies) and uses a series of questions – including “does this company have high free cash flow?”; “does this company have a strong balance sheet?”; and “does this company have a consistent history of returning cash to shareholders?” – to arrive at a portfolio of ~30 stocks with low P/E ratios and the potential for strong total returns.
“The world needs traditional energy, yet the exposure that most investors have to the category is at historically low levels,” said David Allen, CFA, Managing Director at Octane Investments. “But the solution is not simply to allocate more to the biggest and broadest energy funds on the market as doing so only means investors will continue to miss out on the potential growth and yield to be found when taking a more robust, systematic approach to allocating to the sector.”
Allen added that there are a number of use cases he and his colleagues have identified for OCTA, including as a means to increase energy exposure in a diversified equity portfolio, to balance the large-cap-centric tilt of the most widely used energy ETFs on the market, and as a hedge against persistent inflation.
“Our active value approach is uniquely suited to the specific challenges and opportunities inherent in investing in the energy sector, particularly when viewed through the lens of today’s distorted markets. We are very pleased to be pulling back the curtain on the Octane philosophy and to be launching our first ETF in OCTA,” he added.
For more information on Octane Investments and OCTA, please visit https://octane.nyc/octa/.
About Octane
Octane Investments, Inc. is a privately held company founded in 2023 to invest in traditional energy companies. The founder, David Allen, CFA, is the Chair of the Board of Directors at the CFA Society of New York. David earned his undergraduate degree in Economics from the University of Pennsylvania and completed the Value Investing curriculum at Columbia University’s executive education program.
* Gross expense ratio of 0.60%. The Adviser has agreed to reduce its unitary management fee to 0.30% of the Fund’s average daily net assets through at least October 31, 2025. This agreement may be terminated only by, or with the consent of, the Board of Trustees (the “Board”) of Tidal Trust II (the “Trust”), on behalf of the Fund, upon sixty (60) days’ written notice to the Adviser. This Agreement may not be terminated by the Adviser without the consent of the Board. The fee waiver is not subject to recoupment.
Important Information
Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the Fund, please call (855) 574-5749 or visit our website at https://octane.nyc/octa/. Read the prospectus or summary prospectus carefully before investing.
Investments involve risk. Principal loss is possible. Redemptions are limited and often commissions are charged on each trade. Unlike mutual funds, ETFs may trade at a premium or discount to their net asset value.
Equity Market Risk. Common stocks are generally exposed to greater risk than other types of securities, such as preferred stock and debt obligations, because common stockholders generally have inferior rights to receive payment from specific issuers. The equity securities held in the Fund’s portfolio may experience sudden, unpredictable drops in value or long periods of decline in value.
Energy Sector Risks: The market value of energy sector investments can fall due to factors like fluctuating energy prices, geopolitical events, stricter regulations, resource depletion, and environmental accidents. Market volatility is also influenced by large producers and buyers, and companies in this sector may incur high costs and debts for resource expansion.
Oil and Gas Sector Risks: Companies in the oil and gas sector are influenced by global energy prices, exploration and production costs, and are prone to environmental and legal risks. Ð'dValue Investing Risk. The value approach to investing involves the risk that stocks may remain undervalued. Value stocks may underperform the overall equity market if they remain out of favor in the market or are not undervalued in the market.
Concentration Risk. The Fund’s investments will be concentrated in energy-related industries. As a result, the value of Shares may rise and fall more than the value of shares that invest in securities of companies in a broader range of industries.
Foreign Securities Risk. Investments in securities of non-U.S. issuers involve certain risks not involved in domestic investments and may experience more rapid and extreme changes in value than investments in securities of U.S. companies. Financial markets in foreign countries often are not as developed, efficient, or liquid as financial markets in the United States, and therefore, the prices of non-U.S. securities and instruments can be more volatile.
New Fund Risk. The Fund is a recently organized management investment company with no operating history. As a result, prospective investors do not have a track record or history on which to base their investment decisions
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