Siren debuts with US large-cap blend ETF

Jul 6th, 2020 | By | Category: Equities

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Pennsylvania-based investment manager SRN Advisors has unveiled its ETF platform – branded Siren ETFs – with the launch of a passively managed US large-cap blend fund.

Siren debuts with US large-cap blend ETF

The fund combines some of the largest constituents from the S&P 500 and Nasdaq 100 indices.

The Siren Large Cap Blend Index ETF (SPQQ US) has listed on Nasdaq Exchange and comes with an expense ratio of 0.20%.

The fund is linked to the Siren Large Cap Blend Index, developed in partnership with Reality Shares.

The index consists of two portfolios.

The first comprises an equally weighted allocation to the 30 largest US-listed companies, including real estate investment trusts (REITs).

The second, also equally weighted, includes the 30 largest stocks from the Nasdaq 100.

The methodology combines the two portfolios equally. Companies that qualify for both portfolios will, therefore, have double the weight of firms that qualify under just one portfolio.

Reconstitution occurs annually, while rebalancing follows a quarterly schedule.

The index aims to offer a superior risk-adjusted return compared to traditional US large-cap equity benchmarks such as the S&P 500.

By focusing on mega-cap companies, the index seeks to target resilient firms that offer stability through a full market cycle due to their global scale and strong brand recognition. Meanwhile, a tilt towards growth stocks, as represented by the Nasdaq 100, aims to boost long-term returns.

The strategy may also benefit indirectly from the ongoing influx of capital to funds tracking mainstream US equity indices such as the S&P 500 and Nasdaq 100.

The index has over 30% allocated to stocks from the information technology sector (compared to 27% for the S&P 500) with roughly 20% in communication services stocks (vs. 11%), and 10% in each of the consumer staples (vs. 7%), health care (vs. 15%), and consumer discretionary (vs. 11%) sectors.

Using back-tested performance, the strategy has notably outperformed the S&P 500 since inception in January 2007, delivering an annualized return of 10.2% compared to 8.0% for the bellwether US large-cap index. Most of this outperformance accrued during the longest US bull market in history; how the strategy will perform under different conditions may be less certain.

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