Motley Fool Asset Management is continuing its rollout of new ETFs, this time with two funds that draw their picks from a consensus of the firm’s analysts.
The Motley Fool Capital Efficiency 100 Index ETF (TMFE) and the Motley Fool Next Index ETF (TMFX) debuted on the NYSE Arca Friday, both with expense ratios of 0.50%.
Both funds draw their investable universe from a list of every company that is actively recommended by a Motley Fool analyst, or among the 150 highest-rated companies in a database following the company’s team of analysts and newsletter writers.
TMFE then ranks those companies based on “capital efficiency,” or a measure of how much return a business generates from invested capital.
TMFX aims to capture exposure to recommended stocks in the universe, eliminating the 100 largest-cap companies in that universe from contention. The index then selects the next largest eligible stocks for inclusion.
To prevent frequent turnover, the 30 stocks at the lowest end of the top 100 stocks in the investable universe are kept in both funds’ indexes if they don’t fall below number 130 in the Motley Fool database ranking. Both ETFs can hold up to 150 stocks.
These launches bring Motley Fool’s figure this month to four new exchange-traded products. The firm converted the Motley Fool Global Opportunities ETF (TMFG) and the Motley Fool Mid Cap Growth ETF (TMFM) from their original mutual fund structures in mid-December, bringing over $942 million in assets at the time.