NTSX ETF blends large-cap stocks with Treasury futures

The WisdomTree U.S. Efficient Core Fund (NTSX) combines domestic large-cap equities with U.S. Treasury futures contracts. The ETF manages about $1.39 billion and will mark its eighth anniversary in August.

The fund holds a broad U.S. large-cap equity sleeve and uses Treasury futures to provide bond-like exposure without owning cash Treasury securities. The structure is presented as an alternative to a traditional 60/40 stocks-and-bonds allocation by using futures to simulate fixed-income protection while keeping a large equity allocation in place.

WisdomTree wrote, “We think a futures overlay can add value, delivering the desired portfolio diversification without sacrificing potential equity upside, changing existing allocations, or altering investment objective.” The issuer describes the overlay as a way to deliver diversification while maintaining participation in equity gains.

WisdomTree pointed to the fund’s performance around the onset of the pandemic and in later market volatility, noting that NTSX recorded a smaller drawdown than U.S. equities, fixed income, long/short strategies and blends of those approaches, and therefore required less upside to restore lost value.

The fund’s use of Treasury futures creates a different tax profile than holding cash bonds. Interest from outright bond holdings is taxed as ordinary income. The firm highlighted that returns tied to futures contracts are largely taxed as long-term capital gains, which can result in different tax outcomes for investors depending on their situations.

The ETF provides combined equity and Treasury futures exposure in a single vehicle while preserving a long-term equity allocation. Investors and advisors seeking a compact way to access both equity and bond-like exposure may use NTSX when building diversified portfolios with limited capital.

The material was prepared as part of WisdomTree’s paid sponsorship. Opinions in the material belong to its preparer and do not reflect WisdomTree. The content is provided for educational purposes and should not be taken as investment or tax advice. Investors should consult a financial professional for guidance tailored to their circumstances.