Elkhorn begun trading the Elkhorn FTSE RAFI U.S. Equity Income ETF (BATS: ELKU) on Monday, December 14, 2015. Here is a synopsis of the new ETF:
FUND INFORMATION:
| Symbol: ELKU | Exchange: BATS |
| Name: Elkhorn FTSE RAFI U.S. Equity Income ETF | Net Expense Ratio: 0.39% |
FUND OBJECTIVE:
The Elkhorn FTSE RAFI U.S. Equity Income ETF seeks investment results that generally correspond (before fees and expenses) to the price and yield of the FTSE RAFI US Equity Income Index.
REFERENCE INDEX:
The FTSE RAFI US Equity Income Index comprises U.S.-listed large, mid and small capitalization stocks. The Index is designed to measure the performance of high dividend yielding stocks that have been screened for financial health. The Index begins with the FTSE US All Cap Index (Initial Universe) and then follows a rules-based methodology to select high yield stocks which have been screened to target sustainable income. The Initial Universe is a market-capitalization weighted index representing the performance of large, mid and small capitalization stocks in the United States.
The Index Provider ranks constituents by 3 financial health metrics:
(i) return on assets;
(ii) cash flow to short-term debt plus interest expenses; and
(iii) net operating assets scaled by total assets.
Constituents comprising the bottom ranked 20% in any one of these measures are excluded.
The Index Provider then ranks the remaining constituents by trailing 12-month yield; below-median yielding companies are removed. Next, the Index Provider weights the eligible stocks by the fundamental weight times dividend yield. Index constituents are selected and weighted using four fundamental factors, as opposed to market capitalization. Fundamental weights are calculated using the following fundamental measures of company size drawn from a company’s annual financial statements:
(i) sales averaged over the prior 5 years;
(ii) cash flow averaged over the prior 5 years;
(iii) book value at the review date; and
(iv) dividend distributions averaged over the last 5 years. The fundamental weight for each security is determined by equally weighting each of these fundamental measures. Finally, the Index Provider may adjust the weighting of each constituent relative to its respective liquidity as measured by average daily trading volume, adhering to a maximum 5% and minimum 0.1% weight to any single constituent.
As of October 30, 2015, the Index consists of approximately 158 stocks from the Initial Universe. Index constituents are rebalanced annually in March.
Top 10 Holdings (12/09/15):
| Microsoft Corp | 5.27% |
| Wells Fargo & Co | 5.26% |
| Exxon Mobil Corp | 4.11% |
| Chevron Corp | 3.36% |
| Philip Morris International Inc | 3.35% |
| Pfizer Inc | 3.17% |
| Johnson & Johnson | 2.72% |
| McDonald’s Corp | 2.49% |
| International Business Machines Corp | 2.36% |
| Altria Group Inc | 2.04% |
Sector Allocation (12/09/15):
| Financials | 15.64% |
| Consumer Staples | 13.92% |
| Info. Technology | 13.79% |
| Consumer Discr. | 11.84% |
| Energy | 11.71% |
| Industrials | 11.14% |
| Health Care | 10.65% |
| Utilities | 5.35% |
| Materials | 3.76% |
| Telecomm. Services | 2.20% |
Useful Links:
ELKU Home Page
ETFtrack Comment:
Founded in 2013, Elkhorn is redefining the relationship between investment strategy and product structure: designing, sponsoring and distributing innovative, research-based investments solutions. At Elkhorn, research drives design and advisors drive structural decisions. Elkhorn’s founder, Ben Fulton, is a recognized leader in the ETF industry, leveraging 30 years of financial services experience to meet the needs of today’s investment advisor.