Florida-based investment company Timothy Plan has launched its latest ETF, a market-neutral high dividend strategy suitable for biblically responsible investors.
Timothy Plan has launched a market-neutral ETF suitable for biblically responsible investors.
The Timothy Plan Market Neutral ETF (TPMN US) has been listed on NYSE Arca with an expense ratio of 0.65%.
The actively managed fund invests in developed market dividend-paying stocks of companies from across the market capitalization spectrum.
To be eligible for portfolio inclusion, firms must comply with Christian principles as set out by the eVALUEator Biblically Responsible Investing (BRI) methodology. The screening process eliminates firms with alcohol, tobacco, gambling, abortion, and pornography business activities as well as those involved, either directly or indirectly, in “promoting anti-family entertainment or alternative lifestyles”.
As an alternative to investing directly in equity securities, the ETF may invest in other biblically responsible ETFs offered by Timothy Plan. Timothy Plan’s ETFs generally provide diversified equity exposure to companies aligned with Christian principles while weighting portfolio constituents by the inverse of their average price volatility over the past six months.
Timothy Plan’s latest ETF, TPMN, then seeks to neutralize the equity market exposure (beta) of its portfolio as best as possible by taking short positions in broad index futures, primarily those based on the S&P 500 or Nasdaq 100.
Once equity market beta has been neutralized, the primary component of the ETF’s residual return will be the income derived from the portfolio’s dividend-paying stocks. In so far as the ETF invests in Timothy Plan’s other ETFs, the fund’s return will also reflect the relative performance of an inverse-volatility approach compared to the broad equity market.
According to Timothy Plan, TPMN’s investment approach is thus designed to offer hedge-fund-like returns and an income stream that is independent and uncorrelated to the performance of equity and fixed income markets.