Axxion has made its European ETF debut with the launch of the Frankfurt UCITS ETF Modern Value (FRA3TF) on Deutsche Börse Xetra.
The ETF invests globally, selecting stocks that are expected to maximize shareholder value.
The fund, which was co-developed by Frankfurt-based investment boutique Shareholder Value Management, invests in companies worldwide that have strong business owners, structural economic moats, and are expected to provide a high total shareholder return.
The ETF is linked to Shareholder Value’s Frankfurter Modern Value Index which is constructed from an initial universe of stocks from developed markets and China that have market capitalizations greater than €2.5 billion.
Violators of UN Global Compact principles as well as companies with significant operations linked to adult entertainment, tobacco, gambling, alcohol, weapons, nuclear power, oil sands, thermal coal, or fracking are removed.
The index then utilizes Shareholder Value’s proprietary research to screen for companies where a significant stake in the firm is owned by a single family, private equity investors, endowments, or the company’s own management team.
The universe is then also screened for companies that possess structural economic moats, defined as sustainable competitive advantages such as concessions, patents, licenses, network effects, or economies of scale.
Finally, the remaining securities are ranked by their expected total shareholder return (including dividends) over the next five years. The 25 stocks with the highest expected total shareholder returns are selected while ensuring the chosen companies satisfy key fundamental metrics related to healthy balance sheets, consistent and above-average returns on equity, and low levels of debt.
Constituents are equally weighted in the index which is rebalanced on a quarterly basis.
The ETF comes with an expense ratio of 0.52% and is classified as an Article 8 product under the European Union’s Sustainable Finance Disclosure Regulation (SFDR).