Sparkline Capital has unveiled its second ETF, the Sparkline International Intangible Value ETF (DTAN US), an actively managed fund offering exposure to non-US developed market stocks that are undervalued based on an expanded definition of intrinsic value.

Intangible assets have become a key part of intrinsic value as the economy shifts to information-based.

Listed on NYSE Arca with a 0.55% expense ratio, DTAN follows the same strategy as Sparkline’s first ETF, the Sparkline Intangible Value ETF (ITAN US), which is focused on US equities.

ITAN has accumulated $40 million in assets since its June 2021 debut.

ITAN and DTAN aim to modernize value investing by incorporating intangible assets such as intellectual property, brand equity, human capital, and network effects. Sparkline notes that these intangible assets are becoming increasingly important in defining a company’s intrinsic value as the global economy shifts from industrial- to information-based.

Intangible assets, by their very nature, can be difficult to value, often manifesting in vast, unstructured data sources like social media activity, employee reviews, earnings call transcripts, and patent and trademark grants. Sparkline addresses this issue by employing cutting-edge natural language processing techniques, including named entity recognition, sentiment analysis, and summarization, to convert this data into actionable metrics, allowing for a more accurate assessment of companies’ intangible value.

DTAN’s portfolio typically includes at least 50 securities sourced from across the market capitalization spectrum, focusing on companies that score highly in five key pillars: intellectual property, brand equity, human capital, and network effects, as well as traditional tangible value.

This strategy results in a portfolio that significantly outperforms the benchmark MSCI EAFE Index on several key metrics, such as R&D/Price, Patents/Price, and PhDs/Price, reflecting a stronger emphasis on innovation and intellectual capital.

Sparkline notes that DTAN also leads in total intangible value (2.9 vs. 1.0) and has a higher percentage of ‘disruptive’ companies (71.1% vs. 28.0%), offering superior exposure to modern, high-growth sectors.