Broadly speaking, most investors and advisors who have been trading for a while are well aware of the Rule of 72.
The easy formula helps individuals estimate roughly how long it will take for their investment to double in value. How it works is simple: You divide 72 by your anticipated annual return, and the remaining number represents how many years it will take to double your investment.
Now, when it comes to autocallable ETFs, some tend to look at these strategies as mainly a means for amplifying portfolio income. However, you can actually harness the advantages of autocallable yield notes and apply them to a long-term growth strategy.
For instance, take a look at the Calamos Autocallable Growth ETF (CAGE). As the creator of the autocallable ETF category, the exchange-traded fund from Calamos Investments leverages the firm’s experience in piloting autocallable strategies to offer a take on the approach that focuses on long-term growth. Instead of monthly calls with a focus on regular income, CAGE’s notes are called on an annual basis, with a focus on growth.
The laddered autocallable offers exposure to the MerQube US Large-Cap Vol Advantage Autocallable Growth Index (MQAUTOCG). This index’s strategy focuses on exposure to E-Mini S&P 500 Futures contracts, with a 35% implied volatility target.
Testing CAGE With the Rule of 72
Recently, MerQube released an insights post explaining how the Rule of 72 showcases the growth merits of this particular index. Based upon a 20-year backtest between January 2006 through March 2026, MQAUTOCG’s doubling period takes about five years. Meanwhile, as the MerQube post noted, the State Street SPDR S&P 500 ETF (SPY) would take closer to seven years to do the same thing.
Remember: This potential for faster growth comes alongside the other benefits that you’d expect from autocallables. The MerQube index doesn’t even necessarily need to be in the green for CAGE to continue to grow. It just needs to not fall below the -50% principal barrier level.
Furthermore, CAGE offers the additional benefit of a memory feature. If the index falls down too far at the end of the year, no coupon gets paid out. However, at the end of subsequent years, if the index remains above the barrier, that missing coupon is retroactively paid out.
This approach helps CAGE operate as an innovative growth engine for those looking to bolster their long-term returns of their portfolio. On the math alone, both offensively and defensively, CAGE may very well be worth a closer look.
For more information about Calamos Autocallabe ETF visit: www.calamos.com/autocall .
Related: Calamos Autocallable Growth ETF (CAGE): The Next Evolution of Structured Products
Past performance is no guarantee of future results.
Before investing, carefully consider the fund's investment objectives, risks, and charges and expenses. Please see the prospectus and summary prospectus containing this and other information which can be obtained by calling 1-866-363-9219. Read it carefully before investing.
Calamos Investments LLC, referred to herein Calamos is a financial services company offering such services through its subsidiaries: Calamos Advisors LLC, Calamos Wealth Management LLC, Calamos Investments LLP, and Calamos Financial Services LLC.
An investment in the Fund(s) is subject to risks, and you could lose money on your investment in the Fund(s). There can be no assurance that the Fund(s) will achieve its investment objective. Your investment in the Fund(s) is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. The risks associated with an investment in the Fund(s) can increase during times of significant market volatility. The Fund(s) also has specific principal risks, which are described below. More detailed information regarding these risks can be found in the Fund's prospectus.
The principal risks of investing in the Calamos Autocallable Growth ETF include: authorized participant concentration risk, autocallable structure risk, contingent income risk, early redemption risk, barrier risk, calculation methodology risk, cash holdings risk, correlation risk, costs of buying and selling fund shares, counterparty risk, credit risk, derivatives risk, equity securities risk, FLEX Options risk, index risk, interest rate risk, investment in a subsidiary, laddered portfolio risk, liquidity risk, market maker risk, market risk, new fund risk, non-diversification risk, other investment companies risk, premium-discount risk, secondary market trading risk, swap agreement risk, tax risk, trading issues risk, valuation risk, and volatility target index risk.
Autocallable Structure Risk --The Fund’s returns are correlated to the performance of a synthetic portfolio of autocallable notes tracked by the Laddered Autocall Index. Autocallable notes have specific structural features that may be unfamiliar to many investors:
--Contingent Income Risk: Coupon payments from the Autocalls are not guaranteed and will not be made if the Underlying Index falls below the Coupon Barrier on observation dates. This means the Fund may generate significantly less income than anticipated during market downturns.
--Early Redemption Risk: Autocalls in the Portfolio may be called before their scheduled maturity if the Underlying Reference Index reaches or exceeds the Autocall Barrier on observation dates. This automatic early redemption could force reinvestment of that portion of the portfolio at lower rates if market yields have declined.
--Barrier Risk: If the Underlying Reference Index falls below the Protection Level Barrier at the maturity of an Autocall in the Portfolio, that portion of the Portfolio will be fully exposed to the negative performance of the Underlying Reference Index from its initial level. This conditional protection creates a binary outcome that can result in sudden, significant losses if barriers are breached
The MerQube US Large Cap Vol Advantage Index is designed to provide volatility adjusted exposure to E-Mini S&P 500 futures contracts by targeting an implied volatility of 35%, subject to a 6% decrement per annum. Unlike traditional equity indices that maintain fixed allocations, this index dynamically adjusts exposure based on market volatility conditions. During calm or typical market environments, the Index increases exposure to equity futures while during volatile market periods, the Index reduces exposure to equity futures. Unlike other volatility target indices that rebalance daily based on realized volatility, this Index rebalances weekly (at the end of each week) based on one-week implied volatility derived from SPY weekly options prices. This approach seeks to maintain a more consistent risk profile across varying market conditions while potentially reducing drawdowns during market stress and improving risk-adjusted returns over time. The Index is a rules-based, systematic index designed to provide dynamic exposure to US large-capitalization equities while employing a volatility management methodology that seeks to maintain a target volatility level. The Index dynamically adjusts exposure between the Equity Component and a cash position based on prevailing market volatility conditions.