I have also been reading about the possible SC revival. With respect to the indebtedness of many small companies, I am persuaded by the managers at Distillate Capital, whose SMID fund, DSMC, purposefully avoids stocks of firms that carry excessive debt. DSMC performance is not in the least bit shabby, although the fund does not have a long history. DSTL, however, has firmly established itself in the LC arena. Article linked:
https://distillatecapital.com/wp-content/uploads/2023/10/Small-Stocks-Debt.pdf

So declares Spencer Jakab, a WSJ writer, in the October 11 WSJ.
His argument is that small caps are historically undervalued relative to large caps: "the ratio of the Russell 2000 to the Russell 100 index, which has moved between a low of 58% ... to a high of around 115% ... is back down to 74%, indicating a fairly stressed level." At the same time he admits headwinds: small caps are far more exposed to interest rate changes than are large caps. Their debt is more likely floating than fixed and the average maturity on their debt is 4.4 years versus twice that for large caps.
Why consider them? Small caps have outperformed large caps, by an average of 16.51%, coming out of every one of the past 11 recessions. (SJ's wording is odd here: "in the 12 months after a recession was declared every time." The Lords of Finance generally officially declare a recession about eight months after it ends.)
In particular, small value is a good place to be. Focusing on small-value "could have the added benefit of supercharging returns during a recovery. For example, the years 2001-2004 saw $100 investing in the S&P 500 turn into about $98 which an investment in the Russell 2000 Value grew to $180."
The "almost" is the "they do well after a recession but suffer during one" part, I would guess.
My own exposure to the small cap sub-class is divided between the ultra-cautious Palm Valley Capital (micro-cap value, $250M AUM, 13% invested in stocks, up 5.3% YTD) and the ultra-charged Grandeur Peak Global Micro (micro-cap growth, soft-closed with $41M AUM, fully invested, down 2% YTD, but top 1% over five years).

Whew! Opened the window last night - but didn’t jump. :)
Nothing that out of the ordinary appears on my limited tracker. Bond market is closed today in honor of the guy who didn’t discover America. Uptick in gold & energy which had fallen recently. My Swiss equity holding bounced higher - possibly a safe haven flight into the franc. Bloomberg is reporting that Lockheed and some of the other defense contractors are seeing big gains. Wouldn’t you know?
Side-note: Settlement dates on trades made last Thursday or Friday have been extended one extra day because of the bank closure today. Discovered this when I contemplated possibly selling off a bit of a N/R fund I added to only Thursday.

Those FR ETFs are doing well this year. Other FR/BL funds are up 8-10% YTD. As short term junk bonds, they do have downside risk during stress period such as March 2020 (COVID-19) and lost in high single digits. BL/FR recovered in the same year as FED cut rate to near zero. For tax-deferred account, these ETFs are good substitute for cash, but keep the eyes open as the market condition deteriorates.
USFR is another option besides T bills in taxable account, since both are state tax-exempt.

Several people have commented in other posts about cumulative performance figures being distorted by a recent year's hot performance ("what have you done for me lately"), including Prof. Snowball, me, and others.
In Prof. Snowball's piece (linked to above, and here), he praises BRUFX by looking at "three metrics across more meaningful stretches: multiple decades, full market cycles and the last two market crashes." BRSVX hasn't been around nearly as long as BRUFX; it started in Oct 2003. With this limitation in mind, here are the data for AVALX, PVFIX, BRSVX. I included IJS (S&P 600 value ETF) as a benchmark in the Portfolio Visualizer link for each period but did not transcribe its figures below.

Period		CAGR				Std Dev			    Sharpe Ratio
AVALX	PVFIX	BRSVX		AVALX	PVFIX	BRSVX		AVALX	PVFIX	BRSVX
15 yr	11.02%	5.54%	9.51%		28.77%	10.78%	22.81%		0.75	0.69	0.72
Full Cycle 2007-2020
6.81%	4.59%	5.24%		28.18%	10.20%	21.97%		0.35	0.41	0.30
Down Cycle 2007-2009
-5.09%	2.65%	-9.59%		36.83%	11.35%	28.03%		-0.01	0.11	-0.37

Looking at these broader picture numbers, it seems not so much that BRSVX benefited from one hot year, but rather that it doesn't do quite so well in down years. Comparing the BRSVX with AVALX not by a calendar year (i.e. 2020), but trough to peak (roughly 3/19/20 - 6/4/21), one sees similar performance though following different paths.
http://stockcharts.com/h-perf/ui?s=BRSVX&compare=AVALX&id=p85687049134
It's in the latter half of 2021, when the market turned and AVALX's greater volatility worked to its detriment that the funds diverged radically.
https://stockcharts.com/h-perf/ui?s=BRSVX&compare=AVALX,IJS&id=p37670197904
PVFIX is certainly a steady performer. But at a cost of way underperforming in good years. From its chart (see the 15 year performance link above), it almost looks like a SCV cousin of RPHYX - ridiculously steady relative to peers. Something I value in a "near cash" fund. But in an equity fund, my personal risk tolerance is a bit higher than that.
If you like AVALX, did you look into DFFVX? A clone of it is available in variable annuities, e.g. TIAA. So unlike the Fidelity fund that is used only internally by Fidelity, some investors could access this fund (sort of).

I'm still learning to navigate in a world in which the Morningstar fund screener is ... well, worthless. A once-useful tool has been reduced to being able to answer a single question: "what does Morningstar think about this fund?" Star rating, analyst rating, ESG rating: yes, yes, yes. Comparisons of absolute and risk-adjusted returns over meaningful periods? Go 'way, kid, ya bother me!
Today's adventure sought to answer the question: what are the most consistently solid small cap value funds around? I used MFO Premium to look at domestic and global funds, checked Sharpe and APR for the past 3-, 5-, 7-, 9- and 11-year periods. I found two disappointments: two Great Owl funds were consistently in or around the top five, but one was only available to Fidelity fund managers (Fido Series Intrinsic Opps) and the other (Kinetic Small Cap Opps) had a 41% stake in a single stock, Texas Land & Power.
Pinnacle Value and Aegis Value were frequently, but not always, top five funds. They're both rock solid, distinctive, tiny one-man operations.
The surprise was Bridgeway Small Cap Value, the fund that was in the top five more often that any other. Small- to micro-cap. 130 names. Quant. Five star.
All of which I was going to share until I scanned its Morningstar profile and noticed that its success was entirely driven by one year: 2021. The fund made north of 67% and left everyone in the dust. That number then elevated all of the trailing comparisons. It otherwise trailed more than two-thirds of its peers in five of the past 11 years. It's trailed its index six times but I have no idea of what to make of it since it's a custom Morningstar index which apparently cannot be entered into their charting tool to generate a detailed comparison ... though I can get the index denominated in Euros, pounds, Canadian dollars...). Overall, 2020-2022 was a solid stretch for the fund. 2013-19 and 2023, not so much.
All of which I share as a cautionary tale: look carefully, then look again, differently.

op cit

these utilities need to spend a lot of money to basically harden their grids from storms, from fire that we saw, obviously, what happened to Hawaiian Electric. And so, that’s really driving a really powerful capital-expenditures cycle.

The main reason I started small positions in GRID in our IRA's and taxables.
Kind of shocking to see utes get some love from one of the smart guys.

https://www.sec.gov/Archives/edgar/data/1593547/000139834423018996/fp0085383-1_497.htm
497 1 fp0085383-1_497.htm
THE ADVISORS’ INNER CIRCLE FUND III
(the “Trust”)
Advocate Rising Rate Hedge ETF
(the “Fund”)
Supplement dated October 5, 2023 to the Fund’s Summary Prospectus, Prospectus and
Statement of Additional Information (“SAI”),
each dated January 28, 2023, as supplemented
This supplement provides new and additional information beyond that contained in the Summary Prospectus, Prospectus and SAI, and should be read in conjunction with the Summary Prospectus, Prospectus and SAI.
The Board of Trustees of the Trust, at the recommendation of Advocate Capital Management, LLC (the “Adviser”), the investment adviser of the Fund, has approved a plan of liquidation providing for the liquidation of the Fund’s assets and the distribution of the net proceeds pro rata to the Fund’s shareholders. The Fund will create and redeem creation units through October 24, 2023 (the “Closing Date”), which will also be the last day that the Fund’s shares trade on NYSE Arca, Inc. (the “Exchange”), the Fund’s principal listing exchange. The Fund is expected to cease operations and liquidate on or about October 31, 2023 (the “Liquidation Date”).
In anticipation of the liquidation of the Fund, the Adviser may manage the Fund in a manner intended to facilitate the Fund’s orderly liquidation, such as by holding cash or making investments in other highly liquid assets. As a result, during this time, all or a portion of the Fund may not be invested in a manner consistent with its stated investment strategies, which may prevent the Fund from achieving its investment objective.
Shareholders of the Fund may sell their Fund shares on the Exchange on or before the Closing Date. Customary brokerage charges may apply to such transactions. After the Closing Date, there can be no guarantee that there will be a market for the Fund’s shares. For those Fund shareholders that do not sell their shares on or before the Closing Date, the Fund will distribute to each such shareholder, on or promptly after the Liquidation Date, a liquidating cash distribution equal in value to the shareholder’s interest in the net assets of the Fund as of the Liquidation Date.
The liquidation distribution amount will include any accrued income and capital gains, will be treated as a payment in exchange for shares and will generally be a taxable event for shareholders investing through taxable accounts. You should consult your personal tax advisor concerning your particular tax situation. Shareholders remaining in the Fund on the Liquidation Date will not be charged any transaction fees by the Fund. However, the net asset value of the Fund on the Liquidation Date will reflect costs of liquidating the Fund. Shareholders will receive liquidation proceeds as soon as practicable after the Liquidation Date.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE.
ADV-SK-001-0100

GMO released a research note today, arguing in favor of (a) Japan equities and (b) value investing therein. Here's their bottom line:

• Investors have been chronically underweight Japan for the past three decades, and rightly so given Japan’s weaker relative fundamentals and underwhelming commitment to corporate reform through much of the 1990s and 2000s.
• But conditions on the ground have changed meaningfully. Improving fundamentals and governance reforms are increasingly evident to investors speaking directly with companies and policymakers in Japan, as our Usonian Japan Equity team does. EPS growth has been relatively strong in Japan for years, distributions of excess capital have increased, and policymakers continue to push for more competitive and capital-efficient companies.
• Nonetheless, most international equity strategies remain materially underweight Japanese equities. Of 225 actively managed strategies in the eVestment database that list the MSCI EAFE index as their preferred benchmark, 84% are underweight Japan by an average of 7.5%. (GMO, "Japan Equities Are Compelling…" 10/4/2023)

GMO runs a couple Japan-value strategies.
Japan is rockin' this year. The New York Times agrees that changes in corporate governance are driving the strong returns ("

Investors Are Putting Big Money Into Japan Again. Here’s Why," 6/14/2023). The counterargument, at least according to my newsfeed, to GMO is that the gains are all driven by currency fluctuations. (Not my argument, and I haven't looked at the evidence behind it. I'm just reporting a headline I read yesterday). That said, the top three Japan-oriented funds over the past 10 are all ETFs, all hedged and all doing fine this year. Per MFO Premium:

1. WisdomTree Japan Hedged SmallCap: 14.4% APR for 10 years, 26% YTD, five star, Bronze analyst rating, highest Sharpe ratio, smallest drawdown,
2. WisdomTree Japan Hedged: 11.1% APR, 33% YTD, Great Owl, five star, Bronze analyst rating, tied for #2 in Sharpe
3. Xtrackers MSCI Japan Hedged Equity ETF: 10.3% APR, Great Owl, four star, Silver analyst rating, tied for #2 in Sharpe

Hennessy Japan Small Cap is the first actively managed fund on the 10-year list, at #4.
For what interest it holds, David

Not exactly.
The bank then has two options:
1. Sell the property at a significant discount (let's say $200M)
2. Add value to the property themselves then sell it
Assuming the lender perfected its security interest (i.e. did a UCC 9 filing to put the world on notice that it had a type of lien on the property), then in #1, the buyer would get the property subject to a $300M lien.
how many buyers do you think are out there for distressed $200M office buildings
None, and even fewer (if that were possible) who would buy a $200M office building with a $300M lien against it. Even for $1. That $200M sale ain't a-gonna happen.
As far as walking away from the loan (neither option 1 nor option 2) goes, it is premised on at best a somewhat incomplete understanding of non-recourse loans. Most loans aren't.

WHERE ARE NON-RECOURSE LOANS USED?
These loans are often used to finance commercial real estate projects and other projects that include an extended completion period. In the case of real estate, the land acts as collateral for the loan. A non-recourse loan is also used in financial industries, with securities placed as collateral.
HOW DO I QUALIFY FOR NON-RECOURSE LOANS?
Clearly, the majority of the risk and exposure with non-recourse loans rests with the lender. Therefore, a non-recourse loan may be more difficult to qualify for than a recourse loan. Commercial lenders will often only extend non-recourse loans to finance certain types of properties and only to worthy borrowers. Stable finances and an excellent credit score are two of the most important factors that a lender will look at. Generally, the loan requires the property to be a larger city, be in good condition, and have good historical financials, too.

https://fidelityca.com/non-recourse-loan-financing/
If a large player walks away from a debt, especially one that it could pay, its reputation will be mud for a long time. Most players won't risk their reputation. Though there are exceptions, and they might get lucky - they might find "a reckless institution willing to do business with clients nobody else would touch."
Historically, non-recourse mortgages arose out of the Great Depression. They made the news in the 1990s when several regional real estate markets collapsed and so many homeowners who were underwater simply walked away.

Non-recourse loans are a unique characteristic of the US mortgage market and first emerged in state legislation in the 1930s. A decrease in demand for real estate and the ensuing precipitous drop in prices during the Great Depression led to the realization of mortgages at minimal prices, significantly below their outstanding balances. As a result, not only did borrowers lose the roofs over their heads to lenders but also faced lawsuits by the same lenders for the significant remainder of their debt. This harsh reality caused many states to adopt borrower-friendly legislation. ... In effect it gave the borrower a put option

https://scholarship.law.nd.edu/jleg/vol42/iss2/2/
There are roughly a dozen non-recourse states, the largest of course being California. But it's not so simple there. A bank may execute a non-judicial foreclosure, bypassing the courts and getting a relatively quick sale. If it follows this path, it has no recourse for any deficiency (shortfall). This is the norm for small potato mortgages (I suppose that means $3M homes in California).
However, a bank is not likely to let a creditor with deep pockets like Brookfield simply walk away with a $100M deficiency. It will go through the courts. In California, judicial foreclosures are not non-recourse (pardon the double negative).
Commercial Mortgage Foreclosure (CA), Practice Note, Alston and Bird LLP (14 pages)
Yes, companies like Brookfield will default on a loan (with no recourse), hand back the keys, then buy the same asset back for a huge discount.
Pretty crazy if you ask me
Yes, the idea that they will, or even can, do this is pretty crazy.

Or buy EDV for large capital gains.... or losses !

@ Crash,

as of September 9th, @junkster said ,
I trade only bond funds because of their persistency of trend combined with their lack of volatility. There are exceptions, but since 2000 there has always been a bond category that has beaten the S@P annually. Of course those exceptions are pretty glaring ala 2013, 2017, 2019, 2021, and so far this year. So with an extra $100,000 would just add it to the bond category that is far ahead of the bond pack this year. That would be bank loans/floating rate which I have mentioned previously, Some are already ahead double digits YTD. Aside of March they have been as steady a trender as you could want. They are massively overbought, ripe for a correction, and with fears of rising defaults. But, ( and I have to continually remind myself of this) overbought in Bondland can stay overbought for long periods of time. Then again, this wouldn’t be an investment just a trade. Investment is a foreign term to me. I think the only time I was ever in a position since the 1990s for more than four to six months was in IOFIX in 2020/2021.

https://mutualfundobserver.com/discuss/discussion/61478/how-would-you-invest-100-000-right-now/p2
——Also he mentioned few weeks later that he sold 1/3 of bank loan/ floating rate bond.———-
The quick rise rise of 10 year treasury yield has impact all bonds. I notice the short term junk bonds have peaked and falling too this week. YTD they were the few pockets of bonds that were up high single digit return. High yield corporate bonds such as TUHYX did well YTD and they also started falling last week. Is this déjà vu again of the brutal 2022 among bonds?
So what are your plan?

>>>>>September 21 edited September 21 Flag
Selling 1/3 of my bank loan OEF position on the close. Ugly day for credit including for a change the floating rate ETFs. If I am wrong will buy back. If this is the beginning of a correction will sell more. Unlike in the past cash is no longer trash.
Edit. Make that 40%.<<<<<<<<
I try to post my exits before the fact and sold 40% before the close as shown from my post above. That ugly day for credit on the 21st was a harbinger for what was to come and the top for bank loans - at least so far. The leveraged loan index has been down almost every day since and sold more till I was all in cash. It hasn’t been pretty for bank loans. As with anything they go down a heck of a lot quicker than they go up.

@ Crash,

as of September 9th, @junkster said ,
I trade only bond funds because of their persistency of trend combined with their lack of volatility. There are exceptions, but since 2000 there has always been a bond category that has beaten the S@P annually. Of course those exceptions are pretty glaring ala 2013, 2017, 2019, 2021, and so far this year. So with an extra $100,000 would just add it to the bond category that is far ahead of the bond pack this year. That would be bank loans/floating rate which I have mentioned previously, Some are already ahead double digits YTD. Aside of March they have been as steady a trender as you could want. They are massively overbought, ripe for a correction, and with fears of rising defaults. But, ( and I have to continually remind myself of this) overbought in Bondland can stay overbought for long periods of time. Then again, this wouldn’t be an investment just a trade. Investment is a foreign term to me. I think the only time I was ever in a position since the 1990s for more than four to six months was in IOFIX in 2020/2021.

https://mutualfundobserver.com/discuss/discussion/61478/how-would-you-invest-100-000-right-now/p2
Also he mentioned few weeks later that he sold 1/3 of bank loan/ floating rate bond.
The quick rise rise of 10 year treasury yield has impact all bonds. I notice the short term junk bonds have peaked and falling too this week. YTD they were the few pockets of bonds that were up high single digit return. High yield corporate bonds such as TUHYX did well YTD and they also started falling last week. Is this déjà vu again of the brutal 2022 among bonds?
So what are your plan?

Make Me Smart did a good show today, Tuesday, 10/3, centered entirely on cryptocurrency and the SBF trial. They had a long interview with Zeke Faux, a Bloomberg reporter who's spent two years trying to track crypto and author of the new book, Number Go Up: Inside Crypto’s Wild Rise and Staggering Fall (Sept 2023).
The short version: cryptocurrency is speculation, pure and simple. It's a form of gambling, and the casinos are almost all crooked or scammy. They have no demonstrated utility beyond what your Visa card provides.
As of this evening, 110 cryptocurrencies (of 230 tracked by CoinDesk) are underwater of the trailing 12 months. Six coins are down by more than 75%, one year after "the great housecleaning." In 2022, the crypto market went from $3 trillion to $800 billion, representing the disappearance of 74% of its investors' gains. Dozens of exchanges collapsed. (The founder of one failed Turkish exchange, Faruk Fatih Özer, was just sentenced to 11,196 years in jail for his activities.)
One side note was that the African-American community has been especially victimized by crypto marketers promising them the ability to build "generational wealth" that will bequeath a better life to their kids and grandkids.
The second side note is that most of the crypto bros are praying that SBF receives a sentence of at least 11,197 years since that allows them to dismiss him as "the one bad apple" and relaunch their hype-train.
- - - - -
All of which becomes pressing because fund advisers are piled like the bulls of Pamplona, ready for a wild charge. Starting in August I saw new crypto fund and ETF filings almost daily, with as many at a half dozen new funds filed in a single day. Hedged, leveraged, unhedged, inverse, one currency, multi-currency ... it's all in the queue and the marketing push is going to be deafening.
If they get by the SEC.
The show is, I think, worth the listen for folks trying to keep up. It's non-technical and smart, with two hosts who are just slightly appalled.

Devesh and I, separately, chose to think through the implications of "higher for longer" as a Fed mantra.
Lynn began poking at the new TRP Capital Appreciation ETF and wrote a really nice reflection on Retirement: Year One.
I made some portfolio shifts, which is rare for me. I cut Matthews Asian Growth & Income (MACSX) after a long time. I booked a substantial gain, but mostly in the early years of the holding. What ultimately got me to act was reading the fund's own webpage (their pretty straightforward in reporting performance) and the apparent turmoil / turnover at Matthews. It strikes me as hard to do your job when other people are losing theirs. I added Leuthold Core (LCORX), because I don't have the energy just now to worry about how to reallocate assets when the picture (goodbye, Speaker McCarthy) changes daily. And I had already added RiverPark Strategic Income, which I'd written about this summer in tandem with Osterweis Strategic Income. OSTIX is leading in absolute returns but has more short-term volatility, and I'm just not into that. It's up 5.9% YTD / 5.8% APR over three years.
All of which moves me back closer to my "neutral" position of 50/50 stocks/bonds-cash-alts.

The 20y is a pretty interesting outlier at 5%. Bought at that rate, could be a future cap gain opportunity.

I doubt if I will live 20 more years, but it’s good to be optimistic.

20y is almost for sure past my expiry date, but I wouldn't be buying it to hold to maturity. That's what I meant by a capital gain opp. I doubt I'll buy in, tho, unless it moves even higher.

bonds are higher up than stocks in terms of principal protection
This sort of principal protection concerns bankruptcy. When a company goes bust, whatever assets it has go first toward paying off debt (bond holders). If the company has anything left over (i.e. if it's net value is positive), the remainder goes to stock holders.

There's also income protection - bond holders get paid interest (if possible); only if there is money left do stockholders get paid divs.
TFCVX (Focused Credit Fund) owners were hurt when it was forced into fire sales because people wanted to redeem shares and the mostly illiquid bond assets could not be sold except at huge discounts.

Liquidity Risk. Liquidity risk exists when particular investments are difficult to sell. The Fund may not be able to sell these investments at the best prices or at the value the Fund places on them. Investments in private debt instruments, restricted securities, and securities having substantial market and/or credit risk may involve greater liquidity risk.

Summary Prospectus, 2014
Nevertheless, it ultimately had an 85% recovery rate. This was helped by closing down redemptions to allow it to sell off assets gradually at better prices.
https://focusedcreditfund.com/
https://www.morningstar.com/funds/third-avenue-focused-credit-abruptly-shuttered
M* didn't help: ZEOIX AUM $73.5 million, M* 1*; Negative
M* groups RPHYX and ZEOIX, two short term HY funds, with "regular" (intermediate/long term) HY funds. That results in lower star ratings than they deserve and a negative medalist rating. But that doesn't seem to have hurt RPHYX.
ZEOIX always had risk. @dtconroe noted in Jan 2020 that "in the toughest downmarket for the 2 funds (2015/2016), RPHYX showed almost no dip, compared to a slight dip for ZEOIX". That was posted just before this greater risk was dramatically brought home. Between Feb 21, 2020 and March 24, 2020, ZEOIX lost 14.1% vs. a 2.8% loss by RPHYX. (JNK dropped 21.1%).
Still, it wasn't until 4Q 2022 that assets left in droves (from M*'s ZEOIX performance page). Not because the fund underperformed its category (top quartile for the year, per M*). Perhaps because that's when the fund was sold to Osterweis.

https://www.sec.gov/Archives/edgar/data/1833032/000089418923007431/asymmetricliquidationstick.htm
497 1 asymmetricliquidationstick.htm 497
Filed Pursuant to Rule 497(e)
Registration Nos. 333-250955; 811-23622
ASYMmetric ETFs Trust
ASYMmetric Smart S&P 500 ETF
ASYMmetric Smart Alpha S&P 500 ETF
ASYMmetric Smart Income ETF
October 2, 2023
Supplement to the Summary Prospectuses, Prospectuses and Statements of Additional Information (“SAI”), each dated April 30, 2023, with respect to ASYMmetric Smart S&P 500 ETF, and January 27, 2023, with respect to ASYMmetric Smart Alpha S&P 500 ETF and ASYMmetric Smart Income ETF, each as supplemented and amended.
ASYMmetric ETFs, LLC (“Adviser”), the adviser to ASYMmetric Smart S&P 500 ETF (“ASPY”), ASYMmetric Smart Income ETF (“MORE”) and ASYMmetric Smart Alpha S&P 500 ETF (“ZSPY,” and together with ASPY and MORE, each a “Fund” and collectively the “Funds”), determined that each Fund should be closed. Based upon a recommendation by the Adviser, the Board of Trustees of ASYMmetric ETFs Trust (the “Trust”) has approved a Plan of Liquidation for the Funds under which each Fund will be liquidated on or about October 18, 2023 (the “Liquidation Date”). The Liquidation Date may be changed without notice at the discretion of the officers of the Trust.
Beginning when each Fund commences the liquidation of its portfolio, the Fund will no longer pursue its investment objectives or, with certain exceptions, engage in normal business activities, and each Fund may hold cash and securities that may not be consistent with such Fund’s investment objective and strategy, which may adversely affect Fund performance.
Suspension of Sales and Trading. Effective as of the close of business on October 11, 2023, the Funds will no longer accept orders for the purchase of Creation Units. It is expected that October 11, 2023 will be each Fund’s last full day of trading on NYSE Arca (“NYSE”). Based on this schedule, NYSE is expected to halt trading in shares of each Fund after the market close on October 11, 2023. During the period between market close on October 11, 2023 and the Liquidation Date, because each Fund’s shares will no longer trade on NYSE, there can be no assurance that there will be a market for the purchase or sale of each Fund’s shares.
Liquidation Process. In connection with the liquidation, any shares of the Funds outstanding on the Liquidation Date will be automatically redeemed as of the close of business on the Liquidation Date without the imposition of customary redemption transaction fees. The proceeds of any such redemption will be equal to the net asset value of such shares after the relevant Fund has paid or provided for all of its charges, taxes, expenses and liabilities, including certain operational costs of liquidating and terminating that Fund. The distribution to shareholders of these liquidation proceeds will occur as soon as practicable, and will be made to all of that Fund’s shareholders at the time of the liquidation. Additionally, each Fund must declare and distribute to shareholders any realized capital gains and all net investment income no later than the final liquidation distribution. The Adviser intends to distribute substantially all of each Fund’s net investment income at the time of or prior to the liquidation. All administrative expenses associated with the liquidation and termination of each Fund will be borne by the Adviser.
Other Alternatives. Shareholders of each Fund may sell their shares of the Fund on NYSE until the market close on October 11, 2023, and may incur customary transaction fees from their broker-dealer in connection with such sales. Prior to the Liquidation Date, Authorized Participants may continue to submit orders to each Fund for the purchase and redemption of Creation Units.
U.S. Federal Income Tax Matters. Although the liquidation is not expected to be a taxable event for any Fund, for taxable shareholders the automatic redemption of shares of a Fund on the Liquidation Date will generally be treated as a sale that may result in a gain or loss for federal income tax purposes. Instead of waiting until the Liquidation Date, a shareholder may voluntarily sell his or her shares on NYSE until the market close on October 11, 2023, and Authorized Participants may voluntarily redeem Creation Units prior to the Liquidation Date, to the extent that a shareholder wishes to realize any such gains or losses prior thereto. See “Dividends, Distributions, and Taxes” in each Fund’s Prospectus. Shareholders should consult their tax advisers regarding the tax treatment of the liquidation.
Please retain this Supplement with your Summary Prospectus, Prospectus and SAI.
The date of this Supplement is October 2, 2023.

The fund is JHEQX.
Bloomberg published a longer, more detailed article today: “JP Morgan Options Wale Worries Resurface as Stocks Extend Drop”. (unable to link)
From Reuters: “How A Massive Options Trade by a JP Morgan Fund Can Move Markets”
https://www.yahoo.com/video/explainer-massive-options-trade-jp-100000001.html
Excerpt: ”A nearly $16 billion JP Morgan fund is expected to reset its options positions on Friday, potentially adding to equity volatility at the end of a gloomy quarter for stocks. Analysts have in the past pointed to the JPMorgan Hedged Equity Fund’s quarterly reset roiling markets, and see it as a source of potential volatility during Friday's session.
“The (fund) holds a basket of S&P 500 stocks along with options on the benchmark index and resets hedges once a quarter. The fund, which had about $15.59 billion in assets as of September 28, aims to let investors benefit from equity market gains while limiting their exposure to declines. … Assets ballooned in recent years, as investors sought protection from the sort of wild swings that rocked markets in the wake of the COVID-19 outbreak in March 2020.”