Texas Capital Launches Its First Exchange Traded Fund
Published on Jul 13, 2023
DALLAS - July 13, 2023 - Texas Capital Bank Private Wealth Advisors (a subsidiary of Texas Capital) and the Texas Capital Funds Trust today announced the launch of the Texas Capital Texas Equity Index ETF (NYSE Arca: TXS) (the “Fund”). TXS will seek to track the performance of the Texas Capital Texas Equity Index (the “Index”), an index comprised exclusively of public companies headquartered in the state of Texas. At the time of launch, the Index included a diversified group of 216 publicly traded companies, with individual component weights determined first by sector, as defined by the North American Industry Classification System (NAICS) and based on relative contribution to Texas’ reported Gross Domestic Product (GDP), and then by market capitalization. The construction of the Index is designed to reflect the overall performance of the Texas economy – which, at a GDP of $2.36 trillion in 20221, is the ninth largest in the world.2
“With today’s launch, we enable the world to invest in Texas,” said Edward Rosenberg, head of ETF & Funds Management for Texas Capital and president of the Texas Capital Funds Trust. “We believe the state’s pro-business environment creates persistent competitive advantages for companies based in Texas relative to companies headquartered elsewhere. The modest cost of living, net migration to the state and presence of renowned universities located across Texas means companies have access to human capital. Our launch of TXS will enable Texas-headquartered public companies to continue attracting financial capital as well.”
The Texas Capital Funds Trust is a Delaware statutory trust formed in 2023 and registered as an open-end management investment company under the Investment Company Act of 1940. The Trust has retained Texas Capital Bank Wealth Management Services, Inc., doing business as Texas Capital Bank Private Wealth Advisors, as the adviser to the Fund. The Fund’s portfolio is managed by the chief investment officer of Texas Capital Bank Private Wealth Advisors, J. Steven Orr, who brings more than 30 years of portfolio management experience. The Board of Trustees for the Texas Capital Funds Trust includes Hayman Capital Management Founder and Chief Investment Officer J. Kyle Bass, Texas Capital’s Head of Corporate & Investment Banking Daniel S. Hoverman, Avery Capital Co-founder and Chief Executive Officer Avery Johnson, Texas Capital’s Head of Investor Relations & Corporate Development Jocelyn Kukulka and PIXIU Founder and Chief Executive Officer Eddie Margain.
“The new Texas Capital Texas Equity Index ETF offers investors an opportunity to gain exposure to one of the largest, most diverse and fastest growing economies in the world,” said Texas Capital President & CEO Rob C. Holmes. “As the premier full-service financial services institution based in Texas, we are uniquely positioned to bring TXS to market. For the many people who do not have the good fortune to live in Texas, TXS offers an opportunity to enjoy the economic benefits of the Lone Star State.”
Additional details on the Fund can be found here.
About Texas Capital
Texas Capital Bancshares, Inc. (NASDAQ: TCBI), a member of the Russell 2000 ® Index and the S&P MidCap 400®, is the holding company of Texas Capital Bank (individually and collectively with all affiliates and subsidiaries, “Texas Capital”), a full-service financial services firm that delivers customized solutions to businesses, entrepreneurs and individual customers. Founded in 1998, the firm is headquartered in Dallas with offices in Austin, Houston, San Antonio and Fort Worth, and has built a network of clients across the country. With the ability to service clients through their entire lifecycles, Texas Capital has established commercial banking, consumer banking, investment banking and wealth management capabilities. For more information, please visit www.texascapital.com.
Investors should carefully consider the investment objectives, risks and charges of the Fund before investing. The prospectus contains this information and other information about the Fund, and it should be read carefully before investing. Investors can obtain a copy of the prospectus by calling 844.TCB.ETFS (844.822.3837).
Texas Risk. Texas’ economy relies to a significant extent on certain key industries, such as the oil and gas industry (including drilling, production and refining), chemicals production, technology and telecommunications equipment manufacturing and international trade. Each of these industries has from time to time suffered from economic downturns, and adverse conditions in one or more of these industries could impair the ability of issuers of Texas municipal securities to pay principal or interest on their obligations.
Investment and Market Risk. As with all investments, an investment in the Fund is subject to investment risk. Investors in the Fund could lose money, including the possible loss of the entire principal amount of an investment, over short or prolonged periods of time.
Geographic Concentration Risk. Because the Fund and the Index will invest only in issuers headquartered in Texas, the Fund's performance is expected to be closely tied to various factors such as social, financial, economic and political conditions within that region. Events that negatively affect that region may cause the value of the Fund’s shares to decrease, in some cases significantly. As a result, the Fund may be more volatile than more geographically diverse funds.
Index Tracking Risk. There is no guarantee that the Fund will achieve a high degree of correlation to the Index and therefore achieve its investment objective. The Fund may have difficulty achieving its investment objective due to fees, expenses (including rebalancing expenses) and other transaction costs related to the normal operation of the Fund. These costs that may be incurred by the Fund are not incurred by the Index, which may make it more difficult for the Fund to track the Index.
New Adviser Risk. The Adviser has not previously served as an adviser to a registered mutual fund or ETF. As a result, there is no long-term track record against which an investor may judge the Adviser and it is possible the Adviser may not achieve the Fund’s intended investment objective.
New Fund Risk. The Fund is new and does not have shares outstanding as of the date of the Prospectus. If the Fund does not grow large once it commences trading, it will be at greater risk than larger funds of wider bid-ask spreads for its shares, trading at a greater premium or discount to net asset value, liquidation and/or a stop to trading. Any resulting liquidation of the Fund could cause the Fund to incur elevated transaction costs for the Fund and negative tax consequences for its shareholders.
Passive Investment Risk. The Fund is not actively managed, and the Adviser will not sell a security due to current or projected under performance of a security, industry, or sector, unless that security is removed from the Index by the Index Provider, who is unaffiliated with the Adviser. The Fund invests in securities included in the Index regardless of the Adviser’s independent analysis of the investment decision.
Shares are not individually redeemable and are issued and redeemed at their net asset value only in large, specified blocks of shares called creation units. Shares otherwise can be bought and sold only through exchange trading at market price (not NAV). Shares may trade at a premium or discount to their net asset value in the secondary market. Brokerage commissions will reduce returns.
Texas Capital Bank Wealth Management Services, Inc. d/b/a Texas Capital Bank Private Wealth Advisors (“PWA”), a wholly owned subsidiary of Texas Capital Bank and a Registered Investment Advisor with the U.S. Securities and Exchange Commission (“SEC”), serves as investment adviser to the Texas Capital Texas Equity Index ETF and is paid a fee for its services. Shares of the Texas Capital Texas Equity Index ETF are not deposits or obligations of, or guaranteed or endorsed by, Texas Capital Bank or its affiliates. The Texas Capital Texas Equity Index ETF is not insured by the FDIC or any other government agency. The Texas Capital Texas Equity Index ETF is distributed by Northern Lights Distributors, LLC, member FINRA/SIPC, which is not affiliated with Texas Capital Bank Private Wealth Advisors.
Not a Deposit. Not FDIC Insured. Not Guaranteed by the Bank. May Lose Value. Not Insured by any Federal Government Agency.
1Source: U.S. Department of Commerce, Bureau of Economic Analysis
2Source: Texas Economic Development Corporation