Hits & Misses Of 7 Alpha Seeking ETFs

August 04, 2015

7. Forensic Accounting ETF (FLAG | D-75)

Rounding out our list is the Forensic Accounting ETF (FLAG). The fund rates the earnings quality of companies within the U.S. large-cap space, and then gives a greater weight to companies with higher earnings quality.

A supplement from July indicated that the fund plans to change its index soon and become a long/short ETF, which would give it opportunities to profit from falling stocks as well. However, the fund will continue to employ its forensic accounting strategy, which "critically dissects companies’ financial statements with the goal of identifying the ‘red flags’ of aggressive accounting and revenue recognition practices."

FLAG has attracted only $13 million in assets, and its poor performance may be the reason. Year-to-date, the ETF is down 3.5 percent, the worst performance on this list. Moreover, since inception in January 2013, the fund is only up 39.1 percent, the worst performance in that period.

Five-Year (or since inception) Returns

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