Riding the Bull, Guarding Against the Bear: The Case for Hedged Equity

September 01, 2025 EDT

Markets are climbing, sentiment is bullish, and portfolios look healthier than they have in years.

But here’s the thing—no one rings the bell at the top. Peaks are only clear in hindsight, and even the strongest bull runs may eventually face corrections. For advisors and investors alike, the real challenge isn’t predicting the next move—it’s seeking to position portfolios to participate in the upside while being mindful of potential downside risk.

That’s where the Stratified LargeCap Hedged ETF (SHUS) steps in.

The Allure of the Bull Market

Let’s acknowledge the obvious: momentum is powerful. U.S. large-cap stocks have been on a tear, with mega caps and sector leaders carrying indexes higher. Allocations that leaned into the rally have been rewarded. For clients, the temptation is to keep adding exposure in hopes that the trend continues.

But history reminds us that every cycle, no matter how exuberant, carries risk. The dot-com bubble. The financial crisis. The sharp pandemic drawdown. Each period felt unstoppable until it wasn’t.

The takeaway? Staying invested matters but so does staying protected.

Hedged Exposure: The Middle Path

SHUS offers a rules-based, systematic approach that keeps investors in the game while embedding a downside hedge. Unlike traditional long-only large-cap strategies, SHUS incorporates a built-in options strategy that seeks to reduce exposure when markets turn volatile.

The result? Investors can still participate in equity market gains but with a potential buffer during pullbacks. It’s not about calling the top, it’s about being prepared if the top is already behind us.

Why SHUS Stands Out

Downside Hedge – Built-in hedging seeks to limit losses during market declines.
Stay Invested – Allows clients to maintain equity exposure while reducing stress from volatility.
Stratified Weighting – Balances exposure so no single sector dominates the portfolio.
Reduced Concentration Risk – Avoids over-reliance on mega-cap names.
More Consistent Risk-Return Profile – Designed to smooth performance, especially in turbulent markets.

A Tool for the Times

For advisors building portfolios, SHUS can serve as a core or satellite position that helps answer client concerns:

“What if I miss the next leg up?” — SHUS stays invested in large caps.
“What if this is the top?” — The downside hedge kicks in.

It seeks to be a pragmatic solution in a market where uncertainty is the only constant.

The bull is running, but risk never takes a holiday. Advisors don’t need to choose between chasing upside or retreating to cash. With SHUS, they can potentially pursue equity market gains while maintaining a disciplined hedge.

Because while no one rings the bell at the top, portfolios may still be positioned to hear the warning signs.

👉 Learn more about SHUS and its hedged approach to U.S. large-cap investing here.

Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the Fund, please call (866) 972-4492 or visit our website at https://stratifiedfunds.com/investor-materials. Read the prospectus or summary prospectus carefully before investing.

The Funds are distributed by Foreside Fund Services, LLC. Exchange Traded Concepts, LLC serves as the investment advisor. Foreside Fund Services, LLC. is not affiliated with Exchange Traded Concepts, LLC or any of its affiliates.

Investing involves risk, including loss of principal. The Funds are subject to certain other risks, including but not limited to, equity securities risk, large-capitalization risk, index tracking risk, passive strategy/index risk, and market trading risk. Investing involves risk, including possible loss of principal. There can be no guarantee the Fund will meet its investment objectives.

SSPY Risks: The Fund is subject to certain other risks, including but not limited to, equity securities risk, large-capitalization risk, index tracking risk, passive strategy/index risk, and market trading risk. Investing involves risk, including possible loss of principal.

SHUS Risks: The Fund is actively managed using a proprietary process, and there can be no guarantee that the Fund's investment strategies will be successful. The Fund may invest in Underlying Funds or Securities that are managed with a passive investment strategy, attempting to track the performance of an unmanaged index of securities. This differs from an actively-managed fund, which typically seeks to outperform a benchmark index. Maintaining investments in securities regardless of their individual performance or market conditions could negatively affect the Fund's return. The Fund is subject to certain other risks, including but not limited to, equity securities risk, large-, mid-, and small-capitalization risk, and market trading risk. Investing in securities of small and mid-sized companies may involve greater volatility than investing in larger and more established companies. Certain investments may be subject to restrictions on resale, trade over-the-counter or in limited volume, or lack an active trading market. Purchased put options may expire worthless and may have imperfect correlation to the value of the Fund’s sector based investments. Written call and put options may limit the Fund’s participation in equity market gains and may amplify losses in market declines. The Fund’s losses are potentially large in a written put or call transaction. If unhedged, written calls expose the Fund to potentially unlimited losses. The Fund invests in derivatives. Derivatives are financial instruments that derive their performance from an underlying reference asset, such as an index. The return on a derivative instrument may not correlate with the return of its underlying reference asset. Derivatives can be volatile and may be less liquid than other securities.

Shares are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Investors may purchase or sell individual shares on an exchange on which they are listed. The market price returns are based on the official closing price of an ETF share or, if the official closing price isn’t available, the midpoint between the national best bid and national best offer (“NBBO”) as of the time the ETF calculates current NAV per share, and do not represent the returns you would receive if you traded shares at other times. NAVs are calculated using prices as of 4:00 PM Eastern Time.

The Syntax Stratified LargeCap Index™ is the property of Syntax, LLC, which has contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) to calculate and maintain the Index. The Index is not sponsored by S&P Dow Jones Indices or its affiliates or its third-party licensors (collectively, “S&P Dow Jones Indices”). S&P Dow Jones Indices will not be liable for any errors or omissions in calculating the Index. “Calculated by S&P Dow Jones Indices” and the related stylized mark(s) are service marks of S&P Dow Jones Indices and have been licensed for use by Syntax, LLC, the parent company of Syntax Advisors, LLC. S&P® is a registered trademark of Standard & Poor’s Financial Services LLC (“SPFS”), and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”).

The Syntax Stratified LargeCap Index™ is the property of Syntax, LLC, the Fund’s index provider. Syntax®, Stratified®, Stratified Indices®, Stratified Weight™, and FIS™ are trademarks or registered trademarks of Locus LP. Performance of an index is not illustrative of any particular investment. It is not possible to invest directly in an index.

Stratified Weight™ is the weighting methodology by which Syntax diversifies an index’s constituent companies that share “Related Business Risks.” Related Business Risk occurs when two or more companies provide similar products and/or services or share economic relationships such as having common suppliers, customers or competitors. The process of identifying, grouping, and diversifying holdings across Related Business Risk groups within an index is called stratification, and was designed by Syntax to seek to correct for business risk concentrations that regularly occur in capitalization-weighted indices and equal-weighted indices.

The Stratified Hedged Strategy combines the benefits of exposure to a Stratified Weight™ equity portfolio with a rules-based downside hedge program managed by Exchange Traded Concepts to reduce the risk of losses due to market downturns.

Diversification does not ensure a profit or guarantee against a loss.

The S&P 500® Index is a market-capitalization-weighted index of the 500 leading publicly traded companies in the U.S.

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