Cache Exchange Funds approximate their respective benchmark indexes, such as the S&P 500, S&P 500 Growth, and Nasdaq-100, by employing quantitative portfolio optimization strategies designed to approximate the risk and return characteristics of each benchmark. A Cache Exchange Fund is not an index fund that aims to hold all the constituents of its benchmark.
Take a closer look at how Cache Exchange Funds approximate their benchmark indexes.
In addition to sourcing stocks that align each fund with its benchmark, ongoing fund management involves periodic assessments to rebalance the fund and align holdings with the evolving dynamics of their respective benchmark indexes. Occasionally, Cache might use synthetic exposures such as options or futures to achieve the desired market exposure without needing to hold all constituent stocks directly.
Through these methods, Cache funds are structured to provide investors with similar growth opportunities and diversification benefits to those associated with their respective benchmark indexes. Like an index fund, participation in an exchange fund still includes risk, including the loss of principal.