fbpx
QQQ
-7.48
316.64
-2.42%
DIA
-6.05
319.02
-1.93%
SPY
-7.98
389.38
-2.09%
TLT
-1.19
140.73
-0.85%
GLD
-1.68
162.31
-1.05%

A Pair Of New ETFs Make Avoiding Losers Top Priority

January 21, 2021 1:10 pm
Share to Linkedin Share to Twitter Share to Facebook Share to Print License More
A Pair Of New ETFs Make Avoiding Losers Top Priority

Obviously, identifying winners is the name of the investing game, but there are plenty of examples of avoiding losers being a valid strategy.

What Happened: Some exchange-traded funds make it a point to avoid weak stocks. That group includes New Age Alpha's Avoider ETFs: The AVDR US LargeCap Leading ETF (CBOE:AVDR) and the AVDR US LargeCap ESG ETF (CBOE:AVDG), both of which launched Wednesday.

The concept of loser avoidance isn't new to the ETF space. One of the established funds in the group rapidly developed a track record of topping broader benchmarks and attracting an audience, so the new ADVR and ADVG are entering potentially fertile territory.

Why It's Important: AVDR, New Age Alpha's domestic large-cap solution, filters out the 450 largest domestic equities with the highest human factor scores “resulting in a portfolio that consists of the 50 stocks with the lowest Human Factor that seeks to deliver alpha over existing large-cap benchmarks,” according to the issuer.

The premise is simple: Avoiding high human factor scores can help investors dodge stocks that are richly valued.

“We then rank the components of the universe by Human Factor score and remove 450 stocks with the highest Human Factor scores, the companies we believe are most likely to fail to deliver the growth implied by their stock price,” notes New Age.

That doesn't mean ADVR is a value ETF. Technology, communication services and consumer cyclical stocks combine for over 46% of the fund's weight, giving it a growth feel. Top 10 holdings include Dow components Walt Disney (NYSE:DIS) and Goldman Sachs (NYSE:GS).

What's Next: The AVDR US LargeCap ESG ETF also features a concept that's been tested before, that being avoidance of ESG losers.

AVDG starts with the 600 largest U.S. stocks and removes all but the 50 with the best environmental, social and governance (ESG) scores. Last year, ESG funds outperformed their non-ESG counterparts, confirming that there is something to avoiding ESG losers.

As is the case with many ESG ETFs, the new AVDG is tech-heavy with that sector representing almost a third of the fund's roster. The rookie fund is also top-heavy with Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN) combining for almost 29%.

Both AVDR and AVDG charge 0.60% per year, or $60 on a $10,000 investment.

 


Related Articles

Roku Will Take Lion's Share Of Streaming TV Market, According To Cathie Wood

Ark Investment Management Founder and CEO Cathie Wood joined Benzinga's "Raz Report" for an exclusive interview Wednesday. She shared her thoughts on several stocks, including Roku Inc (NASDAQ: ROKU). read more

Is BlackBerry Back? With New Partnerships, The Company Is Ready For A Closer Look

BlackBerry Ltd (NYSE: BB) has been hot lately, and not only for its WallStreetBets fame. BlackBerry released some big news, including information about its QNX and IVY systems partnerships. read more

Tesla, Bitcoin More Likely To Halve Than Double Value In 2021: Deutsche Bank Survey

Tesla Inc. (NASDAQ: TSLA) and Bitcoin (BTC) are more likely to see their values halved than doubled over the period of next 12 months, according to the majority of respondents in a Deutsche Bank survey published Tuesday. read more

Should Amazon Or Netflix Try To Acquire AMC In 2021?

Every week, Benzinga conducts a survey to collect sentiment on what traders are most excited about, interested in or thinking about as they manage and build their personal portfolios. read more