This New ETF Focuses On Quality, Value And Momentum
The new ETF will compliment ArrowShares' two existing ETFs, the Arrow Dow Jones Global Yield ETF (Northern Lights ETF Trust) (NYSE: GYLD), which is a more risk-adverse, passively-managed ETF; and the Arrow DWA Tactical ETF (Arrow Investments Trust) (NASDAQ: DWAT), which is their more aggressive, actively-managed ETF.
The strategy behind QVM is based on a tri-factor approach to stock selection the company uses by looking at the quality, value and momentum of a stock.
The idea is to provide the investor with defensive characteristics by reducing volatility and reducing losses during market declines. When the market is advancing, the ETF will add stocks that are perceived as undervalued and exhibiting momentum in the hopes of providing growth.
The ETF is made up of 50 stocks across 10 sectors, with industrials at 27 percent and technology at 19 percent as the most heavily weighted.
In terms of market cap, large caps make up the largest portion of the ETF with 66 percent, followed by mid caps at 26 percent.
The top holdings in the portfolio include:
- Kohl's Corporation (NYSE: KSS)
- The Western Union Company (NYSE: WU)
- Delphi Automotive PLC (NYSE: DLPH)
- Chemed Corporation (NYSE: CHE)
Each of these make up between 2.2 and 2.3 percent of the portfolio.
The ETF began trading February 27 at $25.00 per share. Since its inception, the ETF has traded within a few pennies of its initial price and has yet to attract a sizable amount of volume.
In theory, QVM offers investors a strategy that could be able to outperform over the long-term, based on the three distinct characteristics: quality, value and momentum. It will take some time to see how the ETF actually performs in the market versus in "theory."
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