‘DUAL’ Share Class ETF Unveiled

August 13, 2020

Yesterday saw the launch of the first-of-its-kind North Shore Dual Share Class ETF (DUAL) from issuer Exchange Traded Concepts. The fund covers U.S.-listed companies that have at least two share classes of common stock, according to the prospectus.

DUAL comes with an expense ratio of 0.85% and lists on the NYSE Arca.

The investment argument for this type of product is that dual share classes, one type of which is usually offered to executives and company founder, can spur better stock returns. That flavor of share class generally comes with more control over the company than those shares offered to investors not affiliated with the company. This theoretically means that the company’s leaders are better able to concentrate on long-term goals for the company rather than on the short-term generation of profit.

The underlying index’s components are drawn from the largest 3,000 companies listed in the U.S. Companies must meet a minimum size threshold and must have had an initial public offering at least six months previously or within no more than the last 20 years. During rebalancing, preference is given to existing components as long as they meet all other requirements, but new additions are selected based on which share class has the highest trading volume in a 30-day period, according to the prospectus.

The index is weighted based on modified market capitalization and had 177 components as of the end of April. It is reconstituted and rebalanced once a year, the document says.

ETC also offers the $10.6 million North Shore Global Uranium Mining ETF (URNM), which has the same index provider.

Contact Heather Bell at [email protected]

 

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