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Happy Customers, Happy ETF Investors?

November 2, 2016 10:46 am
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Happy Customers, Happy ETF Investors?

Obviously, there are times when investors favor airline stocks, banks and cable companies — all industries that have notoriously poor customer service track records. Financial markets prove it is possible for a company to engage in poor customer relationships and still see their shares rise.

Using a different approach, however, such as pleasing the customer, could also be rewarding for investors. The American Customer Satisfaction Core Alpha ETF (BATS: ACSI) looks to capitalize on the theme of customer satisfaction prompting investor satisfaction.

Betting On Happiness

The American Customer Satisfaction Core Alpha ETF debuted Tuesday and follows the American Customer Satisfactions Investable Index.

That benchmark “utilizes a rules-based methodology to measure the performance of large-cap U.S. stocks by gathering data from customers and utilizing a proprietary econometric model to determine a customer satisfaction score. The underlying index is sector-weighted to reflect the overall U.S. large-cap market and security-weighted based on ACSI customer satisfaction data,” according to ETF Trends.

“Each year, roughly 70,000 customers are surveyed about the products and services they use the most. The survey data serve as inputs to a Partial Least Squares (PLS) econometric model that benchmarks customer satisfaction with more than 300 companies in 43 industries and 10 economic sectors, as well as various services of federal and local government agencies,” noted Michigan-based ACSI Funds.

Exposure, Weighted Average For ACSI

The new ETF provides equal-weight exposure to 10 sectors and e-business and e-commerce providers. The most recent ACSI survey gives investors a glimpse into what types of companies the firm's new ETF will offer exposure.

As of October, the weighted average national ACSI score for sectors and industries was 73.7, according to ACSI Funds data.

No surprise here: Airlines, cable providers, internet service providers and telecom companies scored below average, according to ACSI Funds data.

Consumer staples companies, automotive makers, household appliance manufacturers and some e-commerce firms were among the firms scoring above 80.

The new ETF charges 0.65 percent per year, or $65 on a $10,000 investment.

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