Syntax launches risk-stratified total US equity ETF

Mar 22nd, 2021 | By | Category: Equities

Syntax Advisors has introduced its fourth ETF with the launch of the Syntax Stratified US Total Market ETF (SYUS US) on NYSE Arca.

Syntax launches risk-stratified total US equity ETF

Syntax has introduced a new risk-stratified ETF that provides total US equity market exposure.

The fund provides exposure to the broad US equity market, as represented by the S&P Composite 1500 Index, while harnessing Syntax’s proprietary stratified weighting investment approach to diversify business risk through a smart beta weighting methodology.

The Syntax approach involves the use of a patented classification system to organize an initial universe of stocks into different buckets based on related business risks.

This organizational structure translates into eight unconventional sectors: consumer, energy, financials, food, health care, industrials, information, and information tools.

Each sector receives an equal weight with Syntax using an undisclosed, custom methodology to weight individual securities within each sector.

According to Syntax, this stratified weighting methodology allows investors to better diversify their exposure as opposed to concentrating portfolio risk in the largest companies, a common criticism of market capitalization-weighted indices.

For its existing ETFs, the Syntax Stratified LargeCap ETF, the Syntax Stratified MidCap ETF, and the Syntax Stratified SmallCap ETF, Syntax applies this methodology directly to the ETF’s representative index universe, namely the S&P 500, S&P 400, and S&P 600 respectively.

For the new Syntax Stratified US Total Market ETF, however, rather than applying the methodology directly to the representative S&P Composite 1500 universe, it instead delivers the desired exposure by way of an ETF-of-ETFs structure that invests in its existing three ETFs.

This is because the S&P Composite 1500 is an amalgamation of the S&P 500, S&P 400, and S&P 600 indices.

The weight of each ETF in the new Syntax Stratified US Total Market ETF is set in proportion to its representative index’s weight contribution to the S&P Composite 1500.

As of 18 March, the allocation was 85% to the Syntax Stratified LargeCap ETF, 10% to the Syntax Stratified MidCap ETF, and 5% to the Syntax Stratified SmallCap ETF.

The fund has an expense ratio of 0.35%, which includes the cost of investing in the underlying ETFs, and comes to market with around $20 million in assets under management.

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