Innovator Capital Management, LLC, begun trading a new lobal Asset Strategy ETF, the Innovator IBD ETF Leaders ETF (NyseArca: LDRS), on Thursday, December 21, 2017. Here is a synopsis of the new ETF:
FUND INFORMATION:
| Symbol: LDRS | Exchange: NYSE ARCA |
| Name: Innovator IBD ETF Leaders ETF | Net Expense Ratio: 1.16% |
FUND OBJECTIVE:
The Innovator IBD ETF Leaders ETF seeks to track, before fees and expenses, the performance of the IBD ETF Leaders Index.
REFERENCE INDEX:
The IBD ETF Leaders Index is a rules-based index owned and developed by Investor’s Business Daily (Index Provider) designed to attempt to outperform the broader equity and fixed income markets. IBD uses proprietary relative strength analysis to select Underlying Funds across various asset classes that are showing market-leading relative strength. The Index may be composed of Underlying Funds that invest in any asset class, including foreign and domestic equity and fixed income securities, and, from time to time, other alternative asset classes.
Underlying Funds may invest in securities issued by small-, mid- and large-capitalization companies located in either developed or emerging markets and in securities of any credit quality, including “junk” securities. The Underlying Funds comprising the Index may be passively or actively managed.
The initial universe for the Index is composed of all U.S.-listed exchange-traded funds (ETFs) registered under the Investment Company Act of 1940, as amended. The universe does not include exchange-traded notes, inverse ETFs (ETFs that seek to provide a return that is the exact opposite of an index) with the exception of the ProShares Short S&P 500 ETF, leveraged ETFs (ETFs that seek to amplify the return of an index) and commodity ETFs.
The selection universe is then narrowed by excluding Underlying Funds with the following characteristics:
1. Underlying Funds with an average daily trading volume of less than 100,000 over the previous 50 days;
2. Underlying Funds not trading above their average 6-month price; and
3. Underlying Funds with returns less than those of the S&P 500 Index over the course of the previous 3 months.
The remaining Underlying Funds are then ranked according to IBD’s relative price strength rating methodology. “Relative strength” is an investing technique that seeks to determine the strongest performing securities by measuring certain factors, such as a security’s relative performance against the overall market or a security’s relative strength value, which is derived by comparing the rate of increase of the security’s price as compared to that of a benchmark index. IBD utilizes relative strength to compare an Underlying Fund’s stock price performance over the last twelve months (with performance over the three most recent months more heavily emphasized) against the over 8,000 foreign and domestic equity securities that comprise IBD’s internal database. Each Underlying Fund is ranked according to its relative price performance and assigned a proprietary rating score from 1 (lowest) to 99 (highest). All Underlying Funds with a qualifying rating are included and equally weighted within the Index, subject to the limitations of Section 12(d)(1) of the 1940 Act. If less than three Underlying Funds have a qualifying rating, the Index will be composed of Underlying Funds that invest principally in cash or cash equivalents to bring the number of components to three until the next Index reconstitution and rebalance date.
The Index has also been designed to account for the tendency of Underlying Funds to exhibit mean reversion after periods of outsized price appreciation. Mean reversion is the assumption that an Underlying Fund’s price will tend to move to the average price over time. IBD’s proprietary methodology has indicated a level of price growth at which mean reversion is more likely. If the Index exhibits price appreciation up to this level, the Index will be composed of Underlying Funds that principally invest in cash or cash equivalents until the next Index reconstitution and rebalance date.
Under normal conditions, the Index will be reconstituted and rebalanced on the last trading day of each month. However, if the S&P 500 Index experiences gains of greater than 3% in a given week, the Index will be reconstituted and rebalanced on the final trading day of that week. As of November 30, 2017, the Index was composed of 26 Underlying Funds. However, given that the Index is generally reconstituted and rebalanced monthly, this may not be a current reflection of the Index’s holdings.
FUND HOLDINGS (12/21/17):
| Global X China Consumer ETF (CHIQ) | 7.95% |
| ARK Innovation ETF (ARKK) | 7.92% |
| Guggenheim Solar ETF (TAN) | 7.76% |
| SPDR S&P Homebuilders ETF (XHB) | 7.75% |
| SPDR S&P 500 ETF Trust (SPY) | 7.75% |
| VanEck Vectors Vietnam ETF (VNM) | 7.74% |
| iShares U.S. Home Construction ETF (ITB) | 7.73% |
| iShares Edge MSCI USA Momentum Factor ETF (MTUM) | 7.73% |
| VanEck Vectors Rare Earth/Strategic Metals ETF (REMX) | 7.62% |
| ROBO Global Robotics and Automation Index ETF (ROBO) | 7.56% |
| Shares MSCI China ETF (MCHI) | 7.55% |
| iShares MSCI South Korea Capped ETF (EWY) | 7.48% |
| Guggenheim China Technology ETF (CQQQ) | 7.47% |
SECTOR BREAKDOWN:
| U.S. Equity | 30.96% |
| Global Equity | 30.86% |
| China Equity | 22.97% |
| Vietnam Equity | 7.74% |
| South Korea Equity | 7.48% |
Useful Links:
LDRS Home Page
Category: Multi Asset> Multi Asset Strategy> Asset Allocation
ETFtrack comment:
Here is a comment from Bruce Bond, Chief Executive Officer of Innovator Capital Management:
“Investors’ desire for wealth management solutions that are easily accessed, rules-based, and low-cost has driven the rapid growth of automated, robo constructed ETF managed portfolios. By delivering a dynamic global asset allocated ETF strategy that adapts to changing markets within an ETF wrapper, we can achieve better tax-efficiency for investors. The Innovator IBD ETF Leaders ETF is a single ticket solution that provides structural alpha that cannot be replicated by robos or a traditional wealth management approach.”