AZTLAN debuts global mid & small-cap multi-factor ETF

Aug 24th, 2022 | By | Category: Equities

Virginia-based AZTLAN Equity Management has debuted its first ETF, a global mid and small-cap equity fund that selects its constituents using a rules-based multi-factor approach.

Alejandro Garza, Founder of AZTLAN Equity Management

Alejandro Garza, Founder of AZTLAN Equity Management.

Brought to market in partnership with Tidal ETF Services, the AZTLAN Global Stock Selection DM SMID ETF (AZTD US) has been listed on NYSE Arca with an expense ratio of 0.75%.

The fund is linked to the proprietary Solactive Aztlan Global Developed Markets SMID Cap Index which starts with an initial universe of developed market mid and small-cap stocks (those with market capitalizations between $500 million and $10 billion).

The initial universe is divided into three major regions of the world (North America, Western Europe, and Asia) and, within these regions, companies are classified according to nine sectors (communication services, consumer discretionary, consumer staples, financials, health care, industrials, information technology, materials, and utilities). Firms operating within the energy and real estate sectors as well as pharmaceutical companies from within the health care sector are excluded.

The methodology then assigns each company a multi-factor score based on an equally weighted contribution of six factors according to AZTLAN’s proprietary model. The six factors are value, cash flow, capital structure, growth, earning per share revisions, and price momentum.

The index consists of 27 securities, selecting the top-ranked company within each of the three regions and nine sectors noted above. Constituents are equally weighted, and the index is reconstituted and rebalanced on a monthly basis, potentially resulting in a high rate of portfolio turnover.

Alejandro Garza, Founder of AZTLAN Equity Management, said: “Given the wide range of broad-based products available to investors, we found it timely to launch an ETF that is highly concentrated and focused on fundamentals. We believe investors are in need of differentiated products and AZTLAN prides itself on its deep knowledge and experience in the small and mid-cap space.”

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