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A New Look For The Barron's 400 ETF

March 19, 2019 8:51 am
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A New Look For The Barron's 400 ETF

The Barron's 400 ETF (NYSE:BFOR), an exchange traded fund tracking an index rooted in bottom-up fundamental analysis, recently completed its semi-annual rebalance and made some significant changes at the sector level and among its individual holdings.

BFOR, which turns six years old in June, tracks the equal Barron’s 400 Index (B400), which employs a growth at a reasonable price (GARP) philosophy.

What Happened

“The equal weighted smart beta Index is composed of the highest-rated U.S. stocks based on bottom-up fundamental analysis from MarketGrader,” according to the index provider. “The Index employs a growth at a reasonable price (GARP) methodology to identify financially sound companies across sectors and market cap segments that are likely to create significant shareholder value over the long-term.”

During its recent rebalance, BFOR added some well-known large- and mega-cap stocks while parting ways with some others. Thirty stocks are making their first appearances in the ETF.

Why It's Important

Large- and mega-cap additions to BFOR include Alphabet Inc. (NASDAQ:GOOGL), Amazon.com Inc. (NASDAQ:AMZN), Johnson & Johnson (NYSE:JNJ) and Lockheed Martin (NYSE:LMT).

Notable departures from BFOR include Comcast Corp. (NASDAQ:CMCSA), Lowe's Cos. Inc. (NYSE:LOW), Pfizer Inc. (NYSE:PFE) and Starbucks (NASDAQ:SBUX).

Bryn Mawr Bank (NASDAQ:BMTC), Hubbell Inc. (NASDAQ:HUBB) and LPL Financial (NASDAQ:LPLA) are among the 30 stocks making their debuts in BFOR.

What's Next

At the sector level, health care made the largest jump in BFOR with the addition of 11 new components. Seven technology stocks were added to the fund.

“Despite these gains, B400’s allocation to Health Care remains below its 10-year average of 12%, while Technology, currently the third largest sector in the Index, is just a half point above its historical average of 17%,” according to a statement.

Following the most recent rebalance, BFOR's weights to the financial services and industrial sectors are each about 20 percent, the largest sector weight allowed by the fund's underlying index.

BFOR has been reducing its weight to the consumer discretionary sector. The fund's weight to that sector 14.5 percent with 58 stocks, below the long-term average 73 stocks at a weight of 18 percent.

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