ETF industry debutant Mosaic Collateral Asset Management, or M-CAM, has launched three ETFs on NYSE Arca that provide exposure to firms with strong intellectual property (IP).

The funds provide exposure to firms that are expected to realize the largest economic impact from their intellectual property.

The funds are the Innovation α Global ETF (INAG US), the Innovation α United States ETF (INAU US), and the Innovation α Trade War ETF (TWAR US).

Each ETF tracks a proprietary index that assesses the qualitative attributes of companies’ IP using a patented linguistic analysis process.

This includes analyzing the extent to which a company’s rights in IP are legally enforceable, the existence of comparable IP held by rival firms, the likelihood of the company’s IP being reverse-engineered by other firms, and the diversity of industries to which the IP is applied.

The process seeks to identify firms that are expected to receive the highest economic benefit from their IP.

The Innovation α Global ETF selects 120 of the highest-ranked constituents from the MSCI World Index which represents large- and mid-cap equities from 23 developed market countries.

The Innovation α Trade War ETF also selects 120 highest-ranked constituents from the MSCI World Index but favours firms that are expected to outperform competitors in a trade war.

The Innovation α United States ETF selects 100 highest-ranked constituents from the US large-cap Russell 1000 Index.

Once the indices are formed, the constituents are assigned to peer groups based on the similarity of their IP. All three indices employ a modified equal-weighting scheme that increases the weight of firms that are expected to outperform their peer-group companies.

The indices are rebalanced quarterly and reconstituted annually in January. The reconstitution process is limited to approximately 10% of current constituents in a bid to avoid excessive turnover.

Each ETF comes with an expense ratio of 0.81%.

M-CAM is based in Charlottesville, Virginia, United States.