Matt Kaufman, Senior Vice President and Head of ETFs for Calamos Investments, joined Keith Black, Managing Director of RIA Channel, to discuss the Calamos Autocallable Growth ETF (CAGE) and its approach to amplified long-term growth.
CAGE is the world’s first autocallable growth ETF, following the launch of the Calamos Autocallable Income ETF (CAIE). Kaufman explains that CAGE is designed to deliver amplified long-term growth potentially greater than the S&P 500 by compounding returns within the fund, with no coupon distributions and no associated tax drag.
The ETF holds a laddered portfolio of equity-linked notes, each with a five-year term and an annual observation period. With a historical beta of about 1.3, Kaufman explains that if a note is flat or positive at observation, it is called, and an approximate 30% coupon is credited directly to the NAV. However, even if the note is not called, the coupon is not lost. Instead, it is stored through CAGE’s memory feature, allowing returns to accumulate and compound over time. Kaufman highlights that this provides the potential to compound returns faster than the market.
Each note also has a 50% principal barrier, which is observed at the five-year maturity. This provides full protection against a market decline of less than 50% at the observation date, but can lead to substantial losses once the barrier has been breached. In contrast to traditional equity markets, where time in down markets can be lost, CAGE stores that time. Kaufman adds that this ETF is suited for clients focused on long-term wealth accumulation rather than income.
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