A new subadvisor just launched an actively managed ETF in the liquid alternative market. On Wednesday, Active Alts, Inc. introduced Active Alts Contrarian ETF (NASDAQ:SQZZ) that invests in long positions that are highly shorted.

Brad Lamensdorf Active Alts, Inc. Founder, President

Industry veteran Brad Lamensdorf is the founder, president and owner of the firm, and John Lawrence Allen is the chief operating officer. The strategy of the fund relies on investing in companies with solid fundamentals that are heavily shorted and taking advantage of the “short squeeze.”

A short squeeze occurs when investors try to rapidly cover or buy back their shorts due to actual or perceived appreciation in the security. This activity can lead to increased share price.

Lamensdorf is also the co-manager of the actively managed AdvisorShares Ranger Equity Bear ETF which shorts U.S. traded securities.

He tells MFWire that this is a singularly unique product, and it took him some time to get this fund started.

"There's no other product like it in this space," he says. "This took me two years to get it off. The SEC was very careful on this product because over the past Wall Street has abused this area."

Lamensdorf, PM of the fund, says the fund has $2.5 million in assets.

Rational Advisors, Inc. serves as fund’s investment advisor and Foreside Fund Services, LLC as the distributor. Active Alts distributes through RIAs and the wire channels, traditionally working with financial advisors.

The ETF does not engage in heavily shorted names and invests in securities with market capitalization of $250 million or greater with at least $1 million a day in trading volume. The strategy does not have to be fully invested at all times, and it can raise 100 percent cash if warranted by market conditions.  

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