Daily ETF Watch: Elkhorn Plans Fund

Elkhorn Investments recently filed paperwork with the SEC to launch its first ETF. The firm, founded by Ben Fulton, formerly Invesco PowerShares’ managing director of global ETFs, first filed for exemptive relief back in January 2014, requesting permission to launch actively and passively managed ETFs.

The Elkhorn S&P 500 Capital Expenditures Portfolio will track the S&P 500 Capex Efficiency Index, which basically selects the top 100 stocks in the S&P 500 in terms of capital expenditure efficiency. According to the prospectus, companies eligible for inclusion “must have [their] most recent fiscal year capital expenditures scaled by sales lower than the historical three year average.”

Companies are ranked based on the ratio of the current year to the three-year average, with the stocks with the lowest ratios chosen for the index, the prospectus said.

iShares also recently filed for an ETF that will rely on capex, but in a different way. The iShares U.S. CapEx ETF will be based on an index from Morningstar that will target companies covered by Morningstar analysts that are deemed most sensitive to broad economic capex exposure.

U.S. companies have been sitting on record amounts of cash reserves for a while now, and that may be one of the underlying reasons for filings for two capex-based ETFs within weeks of each other.

The Elkhorn fund is slated to list on Nasdaq, but its filing did not include a ticker or expense ratio. The iShares filing did not include a ticker, expense ratio or exchange.