Syntax Advisors has expanded its suite of actively managed risk-stratified US equity ETFs with a new fund that offers a variation of an existing broad market strategy.
The fund is the second Syntax ETF to provide risk-stratified exposure to the entire US equity market.
The Syntax Stratified Total Market II ETF (SYII US) has been listed on NYSE Arca with an expense ratio of 0.35%.
Syntax’s risk-stratified investment approach involves the use of a patented classification system to organize 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 select and weight individual securities within each sector.
According to Syntax, this stratified weighting approach 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.
Existing funds in Syntax’s risk-stratified suite include the Syntax Stratified LargeCap ETF, Syntax Stratified MidCap ETF, and Syntax Stratified SmallCap ETF which apply the methodology to the large-cap S&P 500, mid-cap S&P 400, and small-cap S&P 600 indices, respectively.
The firm also offers the Syntax Stratified US Total Market ETF (SYUS US) which seeks to outperform the S&P Composite 1500 (an amalgamation of the S&P 500, S&P 400, and S&P 600 indices) by investing in the three aforementioned ETFs in proportion to the contribution of each index’s weight to the S&P Composite 1500. SYUS is also listed on NYSE Arca with a similar expense ratio of 0.35%.
The newest ETF, SYII, also seeks to outperform the S&P Composite 1500 but utilizes a more granular approach when compared with SYUS. It does this by applying Syntax’s model to the entire S&P Composite 1500 and then invests directly in individual stocks, as well as industry-specific ETFs, to replicate the required exposure.