Motley Fool Asset Management has debuted its first ETF – the Motley Fool 100 ETF (TMFC US) – by listing the fund on Cboe ETF Marketplace. TMFC invests in US equities which are among the highest conviction stocks based on Motley Fool analyst research.
Bryan Hinmon, chief investment officer of Motley Fool Asset Management.
The Motley Fool is a multimedia financial-services company founded 25 years ago that provides financial advice for investors through various stock, investing, and personal finance services. It first entered the money management space in 2008 with the launch of a family of mutual funds.
The firm’s first ETF tracks the Motley Fool 100 Index, a market-cap weighted representation of the performance of the 100 largest US companies in The Motley Fool “recommendation universe”. To be eligible for inclusion in the index, a firm must have an open “buy” recommendation in Motley Fool research publications or be among the top 150 stocks in The Motley Fool’s “Fool IQ” research database.
“For years, we’ve heard investors say they don’t have the time or desire to pick their own stocks and they want someone to do it for them,” said Bryan Hinmon, chief investment officer of Motley Fool Asset Management. “The Motley Fool 100 ETF is our latest answer. We can now provide investors with the stock-picking acumen of Motley Fool analysts with the ease of a passive investing vehicle.”
The Motley Fool 100 is somewhat concentrated at both the sector and individual stock level. As of 31 January 2018, information technology (47.1%) makes up just under half the total exposure, followed by consumer discretionary (19.4%), healthcare (12.7%), financials (7.5%) and industrials (4.6%). The top five constituents account for just over a third (34.3%) of the total weight and consist of well-known names such as Apple (8.2%), Alphabet (7.7%), Microsoft (6.8%), Amazon (6.5%) and Facebook (5.1%).
Using back-tested data since 2007, the index has outperformed the S&P 500 Index by returning 11.3% per annum compared to 8.7% for the bellwether index.
TMFC has an expense ratio of 0.50%.
The Motley Fool is not the first media company to enter the ETF space; funds based on research from Investor’s Business Daily (IBD) and Barron’s are already on the market.
The Innovator IBD 50 Fund (FFTY US), managed by Innovator Capital Management, tracks the IBD 50, a list of 50 US stocks with the strongest growth characteristics based on an analysis of 11 factors. FFTY trades on NYSE Arca, has assets under management (AUM) of $350 million and an expense ratio of 0.80%.
The Barron’s 400 ETF (BFOR US) tracks the Barron’s 400 Index, co-created with independent equity research firm MarketGrader. MarketGrader’s proprietary equity rating system assigns nearly all investable US stocks a grade on a scale of 0-100 based on a combination of 24 fundamental indicators across growth, value, profitability and cash flow, picking the top ranking companies after screening for size and sector diversification as well as liquidity. Index constituents are equal weighted, each representing 0.25% of the index upon rebalance. BFOR has AUM of $210m and an expense ratio of 0.65%.
While not yet available in ETF format, Barclays and Time Inc have created a series of indices based on the Fortune 500, the annual list of the largest public and private corporations in the US ranked by revenue. The indices are designed to be investable and thus suitable to underlie ETFs.