ETF Watch: Aptus Plans 2nd Fund

June 09, 2017

Aptus Capital Advisors is planning to launch another ETF as a follow-up to its Aptus Behavioral Momentum ETF (BEMO), which launched about a year ago. The Aptus Fortified Value ETF (FTVA), like BEMO, will track a proprietary in-house index.

The fund is slated to list on the Bats exchange, which is owned by ETF.com’s parent company, CBOE.

FTVA’s index will use an equal-weighted approach and target value equities, while implementing a tail hedge when the methodology deems the U.S. equity market overvalued.

Methodology

The equities component looks to select the most undervalued stocks and REITs from the 1,000-stock Solactive US Large & Mid Cap Index using the Aptus Value Composite Score, which is based on a stock’s free cash flow relative to size, return on capital employed, and the change in price-to-earnings ratio over a five-year period, the prospectus said.

The methodology selects the 50 highest-scoring  stocks and REITs, limiting the representation in any single sector to 15 securities. The equity portion is reconstituted on a quarterly schedule.

Meanwhile, the tail hedge, if implemented, allocates 0.50% of the index’s total weight to the purchase of put options on a large and very liquid ETF covering the U.S. equity market. At such a time, 99.5% of the index’s weight will still be in the equal-weighted basket of undervalued U.S. equities.

The filing did not include an expense ratio.

Contact Heather Bell at [email protected].com.

 

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