DENVER--(BUSINESS WIRE)--Sep 24, 2018--The Barron’s 400 ETF (NYSE Arca: BFOR), a smart beta exchange-traded fund that seeks to track the Barron’s 400 Index (B400), has completed its semi-annual rebalance based on the reconstitution and equal weighting of its underlying benchmark. B400 was designed to give investors a means of tracking some of America’s highest-performing companies based on the strength of their financials and the attractiveness of their share prices. Launched in 2007, B400 was jointly developed by Barron’s, America’s premier financial magazine, and MarketGrader, an independent equity research and indexing firm. In order to adhere to B400’s growth at a reasonable price (GARP) investment philosophy, the Index is reconstituted and rebalanced twice a year, ensuring B400 is composed of the top-ranked stocks from the universe of U.S. equities covered by MarketGrader’s research, regardless of sector or market capitalization.
Prominent large-cap additions to B400 include 1 Visa (V), Intel (INTC), Lowe’s (LOW), Caterpillar (CAT), EOG Resources (EOG), CSX (CSX) and Synchrony Financial (SYF). Notable large-cap deletions include 2 Verizon (VZ), Boeing (BA), AbbVie (ABBV), Walt Disney (DIS), Time Warner (TWX) and Celgene (CELG). Among the 42 companies selected for the first time, some of the highest ranked stocks 3 are Nektar Therapeutics (NKTR), Cactus (WHD), Broadcom (AVGO), Bank OZK (OZK), Qurate Retail (QRTEA) and First Commonwealth Financial (FCF).
On a sector basis, Consumer Discretionary, Energy, and Materials saw the biggest net gains in number of constituents, adding 9, 4 and 3 components, respectively. Financials and Industrials maintained the largest weighting in B400, with 80 companies, or 20% of the Index, the maximum sector allocation allowed according to B400’s rules-based methodology. Tying for third largest sector weighting were Consumer Discretionary and Technology, the latter shedding a further 4 members, with 63 constituents each. Both remain below their 10-year average allocation in B400 of 73 and 69 companies, respectively.
Carlos Diez, CEO and Founder of MarketGrader said, “From a sector standpoint, the reconstituted Barron’s 400 Index reflects the strength of the U.S. economy, particularly among names most dependent on domestic earnings growth. Case in point, this is the ninth consecutive selection period that Financials reached the 20% maximum allocation permitted in B400, with most names in the sector in the mid-cap range and in industries such as Regional Banks. This run of overweighting to its 10-year average allocation of 14% also stands in stark contrast to the sector’s nadir in March 2009, when B400 selected only 20 Financials to its roster a week after the bear market reached bottom. The continued robustness of manufacturing in the U.S. has also been captured in the latest rebalance; it is the fifth in the last seven B400 semi-annual periods in which Industrials hit the sector limit. Lastly, B400’s methodology continues to find plenty of growth at a reasonable price in the rebounding Energy sector, which achieved its largest allocation in B400 since March 2009 and is now overweight to its 10-year average allocation.”
From a size perspective, the newly reconstituted B400 again traded up, replacing 6 mid-cap and 4 small-cap constituents with 10 large-cap names to achieve an average market-cap of $19.6 billion. With only 64 constituents below $1 billion in the new class, B400’s allocation to small-cap stocks reached a record low in the history of the Index. B400’s constituents are equal weighted, each representing 0.25% of the Index upon rebalance, eliminating the tendency in traditional market capitalization weighted indexes of the largest companies to disproportionately impact performance.
_______________ 1 In descending order by market cap, as of 09/11/18. 2 In descending order by market cap, as of 09/11/18. 3 In descending order by MarketGrader ranking, as of 09/11/18.
Diez added, “While tariff and trade war-related economic issues and worries about record market highs dominate headlines, the fundamental picture of domestic stocks’ balance sheets remains strong, especially for an Index that identifies quality companies that can generate attractive growth without overpaying for it. Though B400 finds the market’s sweet spot in mid-cap names, the Index selectively cut its allocation to small-caps in favor of large-caps again, suggesting concerns about a slowdown in global growth are not reflected on large companies’ balance sheets in a systematic fashion.”
The reconstitution has once again raised the fundamental health of the Index; the average MarketGrader score for B400 companies is now 71, compared to 67 for the March selection class. This increase is a function of B400’s design, which selects the 400 highest scoring companies listed on U.S. exchanges every six months. MarketGrader’s equity rating system assigns nearly all investable U.S. stocks a grade on a scale of 0-100 based on a proprietary combination of 24 fundamental indicators across 4 categories of fundamental analysis – growth, value, profitability and cash flow – picking the top ranking companies for BFOR’s underlying Index after screening for size and sector diversification as well as liquidity.
In total, 149 companies were added to the Index upon the rebalance, a turnover rate of 37.25%, below B400’s historical turnover average of 41.7%. 67 companies have been members of the Index for at least 2 consecutive years (4 reconstitutions). Of this group, 14 constituents have been B400 members for at least 5 years, including Ulta Beauty (ULTA), Apple (AAPL), TJX Companies (TJX), Credit Acceptance Corporation (CACC) and Grand Canyon Education (LOPE) 4.
For more information about the Barron’s 400 ETF (BFOR), please visit http://www.barrons400etf.com.
MarketGrader is a Miami-based provider of independent global equity research and indexes that was founded on the belief that fundamental analysis and transparency are central to better investment decision-making. Formed in 1999, MarketGrader offers investors an online research service that aggregates financial data on publicly traded companies and analyzes them based on a proprietary quantitative methodology using 24 fundamental indicators across growth, value, profitability and cash flow. The company’s growth at a reasonable price (GARP) methodology is designed to identify consistent creators of economic value, as it believes such stocks are the best long-term generators of shareholder value. Since its first index was constructed in 2003, MarketGrader Indexes have provided an alternative to traditional market capitalization weighted benchmarks, selecting constituents based on fundamentals rather than size. MarketGrader Indexes cover Domestic, International and Global equities from a global universe of more than 36,000 companies in 94 countries, representing over $83 trillion in market capitalization. In 2007, MarketGrader created the Barron’s 400 Index in conjunction with Barron’s, America’s premier financial magazine. Follow us on Twitter @MarketGrader and connect with us on LinkedIn.
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SS&C is a global provider of investment and financial software-enabled services and software for the global financial services and healthcare industries. Founded in 1986, SS&C is headquartered in Windsor, Connecticut and has offices around the world. Some 13,000 financial services and healthcare organizations, from the world’s largest institutions to local firms, manage and account for their investments using SS&C’s products and services.
ALPS, which was acquired by SS&C in April 2018, provides customized asset servicing and asset gathering solutions to the financial services community through an entrepreneurial culture based on the commitment to “Do Things Right.” Founded in 1985, ALPS continues to actively promote all of its various business segments, from asset servicing through ALPS Fund Services, Inc. to asset gathering through ALPS Distributors, Inc. and ALPS Advisors, Inc. Headquartered in Denver, with offices in Boston, New York, Seattle, and Toronto, ALPS, a wholly-owned subsidiary of DST Systems, Inc., today represents more than 400 employees, over 200 clients, and an executive team that has been in place for more than 18 years. For more information about ALPS and its services, visit www.alpsinc.com. Information about ALPS products is available at www.alpsfunds.com.
_______________ 4 In descending order by MarketGrader ranking, as of 09/11/18.
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There are risks involved with investing in ETFs including the loss of money. Additional information regarding the risks of this investment is available in the risks section of the prospectus.
Barron’s 400 SM ETF shares are not individually redeemable. Investors buy and sell shares of the Barron’s 400 SM ETF on a secondary market. Only market makers or “authorized participants” may trade directly with the Fund, typically in blocks of 50,000 shares.
“The Barron’s 400 Index SM ” is calculated by NYSE Euronext or its affiliates and published by MarketGrader. “Barron’s®,” “Barron’s 400 SM ” and “Barron’s 400 Index SM ” are trademarks or service marks of Dow Jones & Company, Inc. or its affiliates and have been licensed to MarketGrader. One cannot invest directly in an index.
Barron’s © is a service mark of Dow Jones & Company, Inc. and has been licensed to MarketGrader Capital LLC for use with the Barron’s 400 Index SM and sublicensed for certain purposes by ALPS Advisors, Inc. ALPS’s Barron’s 400 SM ETF based on the Barron’s 400 Index SM , is not sponsored, endorsed, sold or promoted by Dow Jones, or its affiliates, and Dow Jones and its affiliates make no representation regarding the advisability of investing in such product.
ALPS Portfolio Solutions Distributor, Inc. is the distributor for the Barron’s 400 SM ETF.
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Jen Molgano, +1 617 648 0948
KEYWORD: UNITED STATES NORTH AMERICA COLORADO
INDUSTRY KEYWORD: PROFESSIONAL SERVICES BANKING CONSULTING FINANCE COMMUNICATIONS PUBLIC RELATIONS/INVESTOR RELATIONS
SOURCE: Barron’s 400 ETF
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PUB: 09/24/2018 09:35 AM/DISC: 09/24/2018 09:34 AM