Motley Fool Adds A Second ETF

Motley Fool, the purveyor of the eponymous investment website and related trading and investing services, added its second exchange traded fund Tuesday.

Motley Fool Asset Management, the asset management unit of Virginia-based Motley Fool, introduced the Motley Fool Small-Cap Growth ETF MFMS. 

What Happened

The Motley Fool Small-Cap Growth ETF is an actively managed ETF that tilts toward the growth and quality factors.

“Under normal circumstances, the fund seeks to stay fully invested and does not attempt to time the market,” according to a filing with the Securities and Exchange Commission.

“The fund is non-diversified, which means that it may invest a significant portion of its assets in the securities of a single issuer or small number of issuers. In addition, at any given time, the fund may have a significant portion of its net assets invested in securities of issuers within a particular sector, such as the information technology, health care, industrial and consumer discretionary sectors.”

Why It's Important

The new ETF's management team focuses on small-cap companies it believes are in the early innings of long-term, sustainable growth. In evaluating companies, MFMS's managers consider factors including economics of the business, a firm's competitive advantages, management and corporate culture and how long the companies can maintain competitive advantages.

“The adviser believes that the economic performance of a business is a signal for quality. The adviser’s process looks at the company’s long-term return on capital, the scalability of its business model, relative and absolute margins, business and product cyclicality and other key performance indicators to gain insight into its potential for future performance,” Motley Fool said in the filing. 

Motley Fool introduced its first ETF earlier this year. The Motley Fool 100 Exchange Traded Fund TMFC, a passively managed ETF, debuted in February and now has more than $140 million in assets under management.

What's Next

The new MFMS is expected to hold 30 or more stocks at any time. The new fund charges 0.85 percent per year, or $85 on a $10,000 investment.

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