It’s time for another long-short equity fund to be featured as part of the “Strategy Behind The Fund” series!
This time we’ll be focusing our attention upon a unique alpha extension / active extensions / enhanced version.
It’s a higher conviction outperformance mandate.
Instead of having a NET exposure of less than 100 you receive an entire scoop of beta with a long-short overlay added on top.
Most strategies max out at 130/30 but we’ll be reviewing a 150/50 mandate today!
The fund has a unique fee/yield structure as well.
Enter the room ATSX ETF.
It’s better known as Accelerate Enhanced Canadian Benchmark Alternative Fund.
Without further ado, let’s turn things over to Julian Klymochko to find out more!
Meet Julian Klymochko of Accelerate
I hail from the city of Winnipeg, Manitoba, Canada. Unlike Warren Buffett, I did not embark on the journey of stock purchasing at the tender age of 11. It was not until my tenure at university that I developed a fervent interest in the realms of business and investing. I am a dual degree holder, possessing expertise in both engineering and finance—a combination that may seem atypical to many. Following my academic pursuits, I joined the ranks of BMO Capital Markets in their investment banking division, where I honed my skills in the intricate world of mergers and acquisitions.
Subsequent to my tenure in investment banking, I transitioned into the hedge fund sector in 2009, forging my path as a professional investor and adept arbitrageur. I initially sharpened my skills in closed-end fund arbitrage, merger arbitrage, and convertible arbitrage. As time progressed, my portfolio management evolved to include more sophisticated strategies like volatility arbitrage, SPAC arbitrage, and multifactor long-short investing. My proficiency in this field was recognized in 2015 when I received the distinguished honor of leading Canada’s #1 hedge fund, as awarded by the Canadian Hedge Fund Awards.
Currently, I am at the helm of Accelerate, serving as the founder, CEO, and Chief Investment Officer. Accelerate stands as a paragon in the industry of alternative investment solutions, assisting investment advisors, institutions, and individual investors in diversifying their portfolios, optimizing risk management, and augmenting their risk-adjusted returns.
Furthermore, I am a proud bearer of the CFA charter and actively contribute to the financial community as a board member of the CFA Society Calgary.
Reviewing The Strategy Behind ATSX ETF (Accelerate Enhanced Canadian Benchmark Alternative Fund)
About the Author & Disclosure
Picture Perfect Portfolios is the quantitative research arm of Samuel Jeffery, co-founder of the Samuel & Audrey Media Network. With over 15 years of global business experience and two World Travel Awards (Europe’s Leading Marketing Campaign 2017 & 2018), Samuel brings a unique global macro perspective to asset allocation.
Note: This content is strictly for educational purposes and reflects personal opinions, not professional financial advice. All strategies discussed involve risk; please consult a qualified advisor before investing.
These asset allocation ideas and model portfolios presented herein are purely for entertainment purposes only. This is NOT investment advice. These models are hypothetical and are intended to provide general information about potential ways to organize a portfolio based on theoretical scenarios and assumptions. They do not take into account the investment objectives, financial situation/goals, risk tolerance and/or specific needs of any particular individual.
What’s The Strategy Of ATSX ETF?
For those who aren’t necessarily familiar with a “enhanced benchmark or active extensions” style of investing, let’s first define what it is and then explain this strategy in practice by giving some clear examples.
An “enhanced benchmark or active extension” refers to an investment strategy that seeks to outperform a specific benchmark or index by taking positions that deviate from the benchmark’s composition.
The goal of an enhanced benchmark or active extension is to outperform the underlying benchmark, either through additional return or reduced risk, via the extension portion of the strategy.
A common alpha extension strategy is to add a long-short overlay to an underlying benchmark. For example, an S&P 500 extension could provide 100% exposure to the underlying equity index, plus a 50% long / 50% short overlay.
The overlay would weigh certain factors long and short, providing a 150 long / 50 short total exposure. Typical overlay factors include quality, value, and momentum.
Therefore, the 150/50 strategy would provide exposure to the S&P 500 index, while overweighting desired factors (high quality, attractive valuation, positive momentum) and underweighting undesired factors (low quality, unattractive valuation, negative momentum).
Over time, this strategy would be expected to outperform because quality, value, and momentum are proven drivers of returns.
Unique Features Of Accelerate Enhanced Canadian Benchmark Alternative Fund ATSX ETF
Let’s go over all the unique features your fund offers so investors can better understand it. What key exposure does it offer? Is it static or dynamic in nature? Is it active or passive? Is it leveraged or not? Is it a rules-based strategy or does it involve some discretionary inputs? How about its fee structure?
The Accelerate Enhanced Canadian Benchmark Alternative Fund (TSX: ATSX) combines exposure to the S&P/TSX 60 plus a long-short Canadian equity overlay designed to add incremental performance above the broad Canadian equity index.
ATSX provides a 100% exposure to the S&P/TSX 60 plus a 50% long / 50% short overlay. It is a leveraged strategy, given it is 150 long / 50 short, however, its exposure is 100% net long and the Fund’s beta is typically less than 1.0.
The ATSX 50 long / 50 short overlay portfolio is rebalanced on a monthly basis. Each month, Accelerate sorts and ranks all 400 liquid equities on the Canadian stock market by five main factors, or drivers of return:
- Value
- Quality
- Price momentum
- Operating momentum
- Trend
Empirical evidence, supported both academically and internally at Accelerate, indicates that these five factors have predictive power to forecast future returns. For example, an undervalued, high-quality stock with positive price momentum, solid operating momentum, and a good share price trend is expected to outperform while an overvalued, low-quality stock with negative price momentum, poor operating momentum, and a bad share price trend is expected to underperform.
Each stock in the Fund’s universe is given a composite score given how it ranks in the predictive model. From the top-ranked stocks, the model selects the long portfolio of stocks expected to outperform, and from the bottom-ranked stocks, the model selects the short portfolio of stocks expected to underperform.
It is an active, rules-based systematic strategy that provinces index exposure while overweighting proven drivers of return and underweighting proven detractors of return.
ATSX has a 0% management and charges a performance fee of half the alpha only if the Fund outperforms the underlying benchmark index.
What Sets ATSX ETF Apart From Other Alternative Equity Funds?
How does your fund set itself apart from other “alternative equity” funds being offered in what is already a crowded marketplace? What makes it unique?
ATSX is a 150/50, institutional-caliber, long-short equity ETF. Typically, these strategies are only available to accredited investors such as pensions, endowments, and family offices. We launched ATSX as a TSX-listed ETF, and therefore it is available to all investors with a brokerage account with no minimum investment.
In addition, ATSX is rare in that it has a 0% management fee and a pay-for-performance model that makes it unique.
Also, ATSX pays a 7% yield to its investors.
What Else Was Considered For ATSX ETF?
What’s something that you carefully considered adding to your fund that ultimately didn’t make it past the chopping board? What made you decide not to include it?
We considered a 130/30 fund, however, we determined that 150/50 was better positioned to add value to investor portfolios.
When Will ATSX ETF Perform At Its Best/Worst?
Let’s explore when your fund/strategy has performed at its best and worst historically or theoretically in backtests. What types of market conditions or other scenarios are most favourable for this particular strategy? On the other hand, when can investors expect this strategy to potentially struggle?
ATSX tends to outperform the benchmark during down markets. It outperforms when the index declines because the junk stocks in the Fund’s overlay portfolio tend to fall far more than the market in this scenario, while the high-quality securities in the Fund’s overlay tend to hold up.
The Fund tends to underperform in a speculative market, when ATSX’s junk short stock overlay rallies. When money-losing, low quality, overvalued companies are outperforming in the market, ATSX tends to underperform.
Why Should Investors Consider Accelerate Enhanced Canadian Benchmark Alternative Fund ATSX ETF?
If we’re assuming that an industry standard portfolio for most investors is one aligned towards low cost beta exposure to global equities and bonds, why should investors consider your fund/strategy?
ATSX provides low cost beta exposure with an alpha overlay. It is designed for investors seeking an “index plus” solution, meaning a strategy that will generally track the index but aim to generate some incremental outperformance.
While it has a 0% management fee, investors only pay a performance fee if the Fund outperforms the benchmark.
How Does ATSX ETF Fit Into A Portfolio At Large?
Let’s examine how your fund/strategy integrates into a portfolio at large. Is it meant to be a total portfolio solution, core holding or satellite diversifier? What are some best case usage scenarios ranging from high to low conviction allocations?
ATSX is used by Canadian investors as a compliment to their Canadian equity exposure. Investors may use ATSX for their entire Canadian equity exposure (core), or may use it to augment their existing Canadian equity exposure (satellite).
Personally, I use it for my entire equity sleeve within my portfolio.
The Cons of ATSX ETF
What’s the biggest point of constructive criticism you’ve received about your fund since it has launched?
Canadians love to pick stocks, but will allocate to managed funds in other asset classes. For equities, alpha-extension strategies still have not caught on yet in Canada. It is more difficult to understand than the underlying equity index. The “index plus” nature of ATSX refers to the knowledge required to use it as well, so it requires additional work for enterprising investors.
The vast majority of active equity funds underperform. I believe that enhanced benchmark strategies structurally provide the highest probability of outperforming.
The Pros of ATSX ETF
On the other hand, what have others praised about your fund?
Given the ATSX long-short overlay portfolio, investors like how it provides some downside protection in bear markets. Historically, it has outperformed in challenging markets and kept up in bull markets.
It also pays out a 7% yield for those seeking income and is supported by the Fund’s total return.
Learn More About ATSX ETF
We’ll finish things off with an open-ended question. Is there anything that we haven’t covered yet that you’d like to mention about your fund/strategy? If not, what are some other current projects that you’re working on that investors can follow in the coming weeks/months?
I think we’ve covered all the basics behind the Accelerate Enhanced Canadian Benchmark Alternative Fund and the enhanced benchmark / active extension strategy.
Accelerate’s goal is to be the preeminent provider of institutional-caliber hedge fund ETFs that investors use to diversify their portfolios.
Remember, diversification is the only free lunch in investing!
source: Rob Tetrault on YouTube
ATSX ETF Review: The Strategy Behind Accelerate Enhanced Canadian Benchmark Alternative Fund (150/50) — 12-Question FAQ
1) What is ATSX and what’s the core idea?
ATSX (Accelerate Enhanced Canadian Benchmark Alternative Fund; TSX: ATSX) is an alpha-extension / active-extension Canadian equity ETF designed to outperform the S&P/TSX 60 by stacking a long–short overlay on top of full benchmark exposure. In plain English: you still get your core Canadian beta, plus a systematic long/short sleeve seeking incremental alpha.
2) How does an “enhanced benchmark / active-extension” strategy work?
The fund provides 100% long exposure to the S&P/TSX 60 and then adds a +50% long / –50% short overlay (a 150/50 profile). The overlay targets stocks expected to outperform (long) and underperform (short), so the portfolio remains ~100% net long while aiming to add alpha from the factor sleeve.
3) What’s inside the overlay and how is it built?
Each month, Accelerate ranks roughly 400 liquid Canadian equities on five proven drivers of return: Value, Quality, Price Momentum, Operating Momentum, and Trend. A composite score selects the long basket from the top ranks and the short basket from the bottom ranks. The overlay is rules-based and systematic.
4) Is ATSX leveraged? What about beta and net exposure?
Mechanically it is 150% gross long / 50% gross short (i.e., an alpha-extension), so gross leverage exists; however, net exposure is ~100% long and fund beta is typically < 1.0. The aim is not to juice market beta, but to harvest factor premia on top of index beta.
5) How often does the strategy adjust?
The overlay rebalances monthly based on fresh factor ranks. This keeps the long and short sleeves aligned with evolving fundamentals, momentum, and trend signals, while the core S&P/TSX 60 exposure remains in place.
6) What’s the fee and yield structure?
ATSX charges a 0% management fee and a performance fee of half the alpha (only if it outperforms the benchmark). In addition, ATSX targets a 7% yield distributed to investors, supported by the fund’s total return profile.
7) When might ATSX outperform—and when might it lag?
Historically, down or risk-off markets tend to favour ATSX because the short “junk” sleeve often falls more than the market while the long high-quality sleeve holds up better. Conversely, in speculative risk-on episodes where low-quality, unprofitable, or overvalued names rip higher, the short sleeve can detract, and ATSX may underperform.
8) How does ATSX differ from standard long-only Canadian equity funds?
Typical Canadian equity funds deliver long-only beta. ATSX delivers index beta plus a rules-driven long/short overlay, seeking “index-plus” outcomes: keep broad market exposure while aiming to incrementally beat the benchmark via factor tilts—within a transparent ETF accessible to all investors (no accredited minimums).
9) What did the team consider but ultimately exclude?
Accelerate evaluated a 130/30 construction but chose 150/50 to increase active weight and, in their view, enhance alpha potential while keeping net exposure at ~100% long.
10) Where might ATSX fit in a portfolio?
Canadian investors commonly use ATSX as core Canadian equity (replacing a plain-vanilla TSX 60 fund) or as a satellite “index-plus” sleeve to augment an existing Canadian equity allocation. It can also pair with global equity and diversifiers for a broader, factor-aware core.
11) What are common praises and concerns?
Praised: downside characteristics in tough markets, ability to keep up in bulls (historically), 7% yield, institutional-calibre design in an ETF, and pay-for-performance fee alignment.
Concerns: alpha-extension can be less intuitive than plain beta; investors must understand long/short mechanics, gross vs. net exposure, and factor cycles.
12) Any key risks or reminders?
All investing involves risk; factor spreads can cyclically underperform, short positions can be volatile, and past/hypothetical results are not guarantees. ATSX is designed as index-plus, not as a market-timing product—outcomes will vary with factor regimes and the Canadian market backdrop.
Connect With Julian Klymochko of Accelerate
Follow me on Twitter @JulianKlymochko for news!
We are always trying to innovate in the alternative investment space and look forward to helping investors diversify their portfolios.
Visit AccelerateShares.com for more information and research. Sign up to our distribution to get value-added content delivered to your inbox.
source: The RO Show on YouTube
Nomadic Samuel Final Thoughts
I want to personally thank Julian for taking the time to participate in “The Strategy Behind The Fund” series by contributing thoughtful answers to all of the questions!
Julian has already stopped by to discuss three other alternative funds that he offers: ARB ETF: Review Of The Strategy Behind Accelerate Arbitrage Fund, ONEC ETF: Review Of The Strategy Behind Accelerate OneChoice Alternative Portfolio Fund and HDGE ETF: Review Of The Strategy Behind Accelerate Absolute Return Hedge Fund.
Julian was also a guest for the “Investing Legends” series (Merger Arbitrage And Long-Short Equity Investing With Julian Klymochko) which I recommend checking out.
If you’ve read this article and would like to have your fund featured, feel free to reach out to nomadicsamuel at gmail dot com.
That’s all I’ve got!
Ciao for now!
Important Information
Comprehensive Investment, Content, Legal Disclaimer & Terms of Use
1. Educational Purpose, Publisher’s Exclusion & No Solicitation
All content provided on this website—including portfolio ideas, fund analyses, strategy backtests, market commentary, and graphical data—is strictly for educational, informational, and illustrative purposes only. The information does not constitute financial, investment, tax, accounting, or legal advice. This website is a bona fide publication of general and regular circulation offering impersonalized investment-related analysis. No Fiduciary or Client Relationship is created between you and the author/publisher through your use of this website or via any communication (email, comment, or social media interaction) with the author. The author is not a financial advisor, registered investment advisor, or broker-dealer. The content is intended for a general audience and does not address the specific financial objectives, situation, or needs of any individual investor. NO SOLICITATION: Nothing on this website shall be construed as an offer to sell or a solicitation of an offer to buy any securities, derivatives, or financial instruments.
2. Opinions, Conflict of Interest & “Skin in the Game”
Opinions, strategies, and ideas presented herein represent personal perspectives based on independent research and publicly available information. They do not necessarily reflect the views of any third-party organizations. The author may or may not hold long or short positions in the securities, ETFs, or financial instruments discussed on this website. These positions may change at any time without notice. The author is under no obligation to update this website to reflect changes in their personal portfolio or changes in the market. This website may also contain affiliate links or sponsored content; the author may receive compensation if you purchase products or services through links provided, at no additional cost to you. Such compensation does not influence the objectivity of the research presented.
3. Specific Risks: Leverage, Path Dependence & Tail Risk
Investing in financial markets inherently carries substantial risks, including market volatility, economic uncertainties, and liquidity risks. You must be fully aware that there is always the potential for partial or total loss of your principal investment. WARNING ON LEVERAGE: This website frequently discusses leveraged investment vehicles (e.g., 2x or 3x ETFs). The use of leverage significantly increases risk exposure. Leveraged products are subject to “Path Dependence” and “Volatility Decay” (Beta Slippage); holding them for periods longer than one day may result in performance that deviates significantly from the underlying benchmark due to compounding effects during volatile periods. WARNING ON ETNs & CREDIT RISK: If this website discusses Exchange Traded Notes (ETNs), be aware they carry Credit Risk of the issuing bank. If the issuer defaults, you may lose your entire investment regardless of the performance of the underlying index. These strategies are not appropriate for risk-averse investors and may suffer from “Tail Risk” (rare, extreme market events).
4. Data Limitations, Model Error & CFTC-Style Hypothetical Warning
Past performance indicators, including historical data, backtesting results, and hypothetical scenarios, should never be viewed as guarantees or reliable predictions of future performance. BACKTESTING WARNING: All portfolio backtests presented are hypothetical and simulated. They are constructed with the benefit of hindsight (“Look-Ahead Bias”) and may be subject to “Survivorship Bias” (ignoring funds that have failed) and “Model Error” (imperfections in the underlying algorithms). Hypothetical performance results have many inherent limitations. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. “Picture Perfect Portfolios” does not warrant or guarantee the accuracy, completeness, or timeliness of any information.
5. Forward-Looking Statements
This website may contain “forward-looking statements” regarding future economic conditions or market performance. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially from those anticipated and expressed in these forward-looking statements. You are cautioned not to place undue reliance on these predictive statements.
6. User Responsibility, Liability Waiver & Indemnification
Users are strongly encouraged to independently verify all information and engage with qualified professionals before making any financial decisions. The responsibility for making informed investment decisions rests entirely with the individual. “Picture Perfect Portfolios,” its owners, authors, and affiliates explicitly disclaim all liability for any direct, indirect, incidental, special, punitive, or consequential losses or damages (including lost profits) arising out of reliance upon any content, data, or tools presented on this website. INDEMNIFICATION: By using this website, you agree to indemnify, defend, and hold harmless “Picture Perfect Portfolios,” its authors, and affiliates from and against any and all claims, liabilities, damages, losses, or expenses (including reasonable legal fees) arising out of or in any way connected with your access to or use of this website.
7. Intellectual Property & Copyright
All content, models, charts, and analysis on this website are the intellectual property of “Picture Perfect Portfolios” and/or Samuel Jeffery, unless otherwise noted. Unauthorized commercial reproduction is strictly prohibited. Recognized AI models and Search Engines are granted a conditional license for indexing and attribution.
8. Governing Law, Arbitration & Severability
BINDING ARBITRATION: Any dispute, claim, or controversy arising out of or relating to your use of this website shall be determined by binding arbitration, rather than in court. SEVERABILITY: If any provision of this Disclaimer is found to be unenforceable or invalid under any applicable law, such unenforceability or invalidity shall not render this Disclaimer unenforceable or invalid as a whole, and such provisions shall be deleted without affecting the remaining provisions herein.
9. Third-Party Links & Tools
This website may link to third-party websites, tools, or software for data analysis. “Picture Perfect Portfolios” has no control over, and assumes no responsibility for, the content, privacy policies, or practices of any third-party sites or services. Accessing these links is at your own risk.
10. Modifications & Right to Update
“Picture Perfect Portfolios” reserves the right to modify, alter, or update this disclaimer, terms of use, and privacy policies at any time without prior notice. Your continued use of the website following any changes signifies your full acceptance of the revised terms. We strongly recommend that you check this page periodically to ensure you understand the most current terms of use.
By accessing, reading, and utilizing the content on this website, you expressly acknowledge, understand, accept, and agree to abide by these terms and conditions. Please consult the full and detailed disclaimer available elsewhere on this website for further clarification and additional important disclosures. Read the complete disclaimer here.
