Diversify Your Diversifiers with the AGF U.S. Market Neutral Anti-Beta Fund (BTAL)

How does BTAL

BTAL

+2.35%

work?

BTAL follows a market-neutral strategy. It focuses on the relative performance between two groups of stocks. Specifically, BTAL does two things:

1. Goes long low beta U.S. equities
   These are companies that tend to move less than the market. Think of them as more stable, less volatile stocks.
2. Goes short high beta U.S. equities
   These stocks tend to swing more than the market. They rise more when markets are rallying but also fall harder during downturns.

The goal is to exploit the spread between these two groups. When low beta stocks outperform high beta stocks, BTAL makes money. This approach creates a new source of risk and return. That’s why BTAL can be an effective diversifier in a portfolio.

The strategy works well in defensive environments where investors pull back from speculative growth names and rotate into quality or value stocks. That’s exactly what happened in 2022. But it can underperform in momentum-driven bull markets like 2021 or even recently in 2025, when high beta names rip higher and low beta gets left behind.

As of August 31, 2025, BTAL holds 198 long and 198 short positions.

From a fundamentals perspective, the long portfolio has an average market cap of $72.3B with a beta of 0.65 and trades at a price-to-earnings ratio of 22.65. The short portfolio is slightly larger by market cap at $79.4B, but riskier, with a beta of 1.39 and a much higher P/E of 31.9. Price-to-book tells a similar story, with longs at 3.4 versus shorts at 5.62.

BTAL is positioned to benefit if defensives and quality stocks take leadership again while speculative growth falls out of favor.

How to incorporate BTAL into a portfolio

You can use BTAL

tactically or strategically. For the former, it can be rotated in and out based on market signals. Some allocators use trend-based models to determine when to lean into BTAL, especially when volatility rises or correlations between stocks and bonds break down.

But a long-term strategic allocation is likely the more durable approach. The point isn’t to judge BTAL in isolation. What matters is how it contributes to the overall portfolio’s risk and return. Even a 10% allocation can move the needle.

For example, over the nearly 14-year period from September 2011 to September 2025, a portfolio with 90% in VBIAX (Vanguard’s 60/40 balanced mutual fund) and 10% in BTAL, rebalanced quarterly, delivered better risk-adjusted returns than VBIAX alone.

Returns were slightly lower in absolute terms, but the 90/10 blend had:

• Lower max drawdown (–19.60% vs –22.78%)
• Lower volatility (8.70% vs 10.48%)
• Higher Sharpe and Sortino ratios
• Lower beta and Ulcer Index

All that came from just a 10% allocation. You can also see how this helped during the 2022 bear market. BTAL softened the drawdown and shortened the time needed to recover:

For allocators looking to hedge tail risk, lower volatility, or just get a return stream that behaves differently, BTAL

offers a clean, rules-based, and liquid alternative ETF solution that fits inside a broader portfolio.

Please note that this article reflects the author’s personal views and does not represent the opinions of the publication or its affiliates. It is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. It is essential to seek guidance from a registered financial professional before making any investment decisions.