Amplify launches tactical ETF of ETFs

Jun 18th, 2018 | By | Category: Alternatives / Multi-Asset

Amplify ETFs has listed the Amplify EASI Tactical Growth ETF (EASI US) on NYSE Arca. The passively managed ETF of ETFs seeks to participate in the upside of high quality growth companies while tactically rotating to fixed income in downward-trending equity markets.

Christian Magoon, CEO of Amplify ETFs.

Christian Magoon, CEO of Amplify ETFs.

“We believe today’s dynamic markets require core investment strategies that participate in the upside while having the flexibility to potentially protect on the downside,” said Christian Magoon, CEO of Amplify ETFs.

“We believe EASI offers attractive equity exposure via its quantitative selection criteria which incorporates both stock price behaviour and fundamentals. Combining this stock selection approach with the ability to rotate into fixed income exposure can be an attractive combination for investors.”

EASI adds a new string to the bow of Amplify ETFs which is generally known for its income solutions, branded YieldShares, and thematic ETFs.

The fund tracks the EASI Tactical Growth Index which has two distinct allocations – 100% equities or 100% fixed income, depending on market signals.

The determination of which allocation is utilized is called the “Long-Term Tactical Allocation Signal,” which measures and compares the monthly changes in the price of the equity components using the trailing twelve-month exponential moving average. When the moving average of the equity component is trending in an upward direction, the fund will invest in equities; however, when the moving average upward trend breaks and reverses, the fund shifts into fixed income. The allocation signal is calculated and applied on a weekly basis.

The equity allocation is composed of select large-cap growth stocks listed on either the NYSE Arca or Nasdaq Exchanges. Stocks with inadequate liquidity are initially screened out. The methodology then assigns a ‘growth score’ based on several fundamental metrics including earnings change, earnings acceleration, sales change, price momentum, price relative to 52-week high, trading volume relative to price trend, and return on equity. The scores range between 1 and 4 with a minimum 3.8 required to make the cut.

Stocks are equally weighted with a maximum weight of 3.03% (minimum 33 constituents). If the index is unable to select 33 constituents, the remaining weight will be allocated equally to the SPDR S&P 500 ETF Trust (SPY US) and the PowerShares QQQ ETF (QQQ US), which tracks the Nasdaq 100 Index.

The fixed income allocation consists of four investment grade bond ETFs, weighted as follows: PIMCO Enhanced Short Maturity Active ETF (MINT US), 35%; Vanguard Short Term Bond ETF (BSV US), 35%; iShares Core US Aggregate Bond ETF (AGG US), 15%; and Vanguard Intermediate-Term Bond ETF (BIV US), 15%.

EASI has an expense ratio of 0.75%.

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