ETF Watch: IndexIQ Plans ‘Power Gauge’ Funds

March 01, 2017

A recent filing from IndexIQ outlines the firm’s plans for three ETFs that track indexes driven by the Chaikin Power Gauge, a binary stock-rating tool from Chaikin Analytics that relies on an algorithm that uses value, growth, technical and sentiment factors. The multifactor model is designed to indicate whether it is likely a stock will outperform.

The three funds are as follows:

  • IQ Chaikin U.S. Dividend Achievers ETF
  • IQ Chaikin U.S. Small Cap ETF
  • IQ Chaikin U.S. Large Cap ETF

The “Dividend Achievers” ETF tracks an underlying index derived from the Nasdaq US Broad Dividend Achievers Index, which covers U.S. stocks with at least 10-consecutive years of dividend growth. The parent index is subjected to a shareholder yield screen that takes into account the price-to-sales ratio of the components. From there, the top half of the stocks are evaluated via the Chaikin Power Gauge, with those expected to underperform eliminated from the index.

The prospectus notes that the index will typically include 50-65 stocks.

The small-cap ETF will track an index derived from the Nasdaq US 1500 Index after its components have been evaluated using the Chaikin Power Gauge and their price-to-sales ratios. The final underlying index includes 200-350 stocks.

Similarly, the large-cap ETF’s index is a subset of the Nasdaq US 300 Index. After the components have been evaluated using the Chaikin Power Gauge and price-to-sales ratio, the final index includes 45-65 securities.

The filing did not include tickers, expense ratios or a listing exchange.

Contact Heather Bell at [email protected].

 

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