Brookmont Capital Management, LLC, is set to move the listing venue for its Brookmont Catastrophic Bond ETF (ILS) strategy to the Texas Stock Exchange as it hopes to onboard the first lead market maker to the fund within weeks.
The Brookmont Catastrophic Bond ETF (ticker ILS), was launched and listed on the New York Stock Exchange (NYSE) ARCA platform at the beginning of April, becoming the first catastrophe bond fund strategy to be US exchange-listed and traded.
Effective September 18th, the listing venue will change, as Brookmont Capital Management has revealed it will be moving the cat bond ETF strategy to the Texas Stock Exchange on that date.
The ticker symbol will remain unchanged, being the appropriate ILS and there’s no change for investors in the cat bond ETF strategy.
A key driver is to expand market maker participation in the catastrophe bond fund, which proved a challenge from the launch of the fund.
The Brookmont Catastrophic Bond ETF failed to secure a lead market maker for its launch, in part because the ILS asset class is difficult to hedge, but now the firm behind it is hopeful this move to a Texas Stock Exchange listing may make that a simpler process.
Ethan Powell, Principal and CIO of Brookmont Capital Management told us that the Texas Stock Exchange has a program in place by which lead market makers can be paid in a more transparent and direct manner and that he hopes to be able to name a lead market maker within just a few weeks.
Powell stated, “The good news is our secondary bid/ask spreads have been exceptionally tight but we need a lead market maker as we grow and anticipate larger institutional allocations.”
The Brookmont Catastrophic Bond ETF has grown steadily to reach over $95.6 million in assets this month and that has increased by around 13% over just the last ten trading sessions.
Rick Pagnani, CEO of King Ridge Capital, the sub-adviser and portfolio manager to the cat bond ETF strategy, told us, “Growth was driven predominantly by net investor inflows, while trading remained orderly and the market price stayed closely aligned with NAV – demonstrating effective liquidity and market-making as the ETF approaches the $100 million milestone. Bid–ask spreads remained tight at around 10 basis points on a median basis, reflecting an efficient secondary market and effective support from the ETF’s authorized participants.”
Powell of Brookmont further explained that the transfer of the listing to Texas is “an opportunity to continue to grow and scale ILS, facilitated by a lead market maker.”
The Texas Stock Exchange (TSE) only began trading back in July, having launched in recent years with strong institutional backing for a new listing and trading venue.
The Brookmont Catastrophic Bond ETF will become the first fixed income exchange traded fund with a primary listing on the Texas Stock Exchange, the ETF will also join the first cohort of listings the TSE has announced.
Brookmont is a Texas headquartered asset manager and the other first listings on the TSE are also local investment firms.
In addition, Powell told us that Brookmont is also working on a new innovation in partnership with the TXSE, an initiative to list a consumer credit and pre-ipo equity interval funds on an exchange.
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