When we say that the Cache Exchange Fund “approximates the Nasdaq-100,” it means that the fund aims to mimic the investment characteristics and performance of the Nasdaq-100 index, though not by directly replicating it stock-for-stock. Instead, the Cache Investment Team uses a strategy that involves:
Portfolio Diversification: We create a portfolio that includes a variety of securities which, when combined, have similar risk and return characteristics to those of the Nasdaq-100. This will likely include many of the same large-cap technology and non-technology stocks that are prominent in the Nasdaq-100.
Targeted Exposure: Instead of replicating the exact composition of the Nasdaq-100, the fund targets a similar exposure through a diversified approach. This means investing in a mix of assets that aligns with the Nasdaq-100’s dominant themes and sectors but may also include additional assets to enhance diversification and manage risk
Investment Algorithm: By employing an investment algorithm that considers factors like benchmark weights, factor exposures, correlation, beta considerations, and sub-sector allocations, we are able to craft a portfolio that aims to behave similarly to the Nasdaq-100 in terms of overall market movements and returns.
The goal is to provide investors with a similar growth trajectory and investment experience to what they would expect from an index fund tracking the Nasdaq-100, but with the specific tax efficiencies of an exchange fund. This approach allows the fund to be flexible in its asset selection while still aligning closely with the performance and risk profile of the Nasdaq-100.
Learn more about the benefits of diversifying from a concentrated position.