TrimTabs’ actively managed US free cash flow ETF surpasses $100m in assets

Aug 9th, 2018 | By | Category: Equities

TrimTabs Asset Management has announced that the TrimTabs All Cap US Free-Cash-Flow ETF (TTAC US) has crossed the $100 million assets under management threshold.

Janet Johnston, portfolio manager at TrimTabs Asset Management.

Janet Johnston, portfolio manager at TrimTabs Asset Management.

The fund, which began the year with $38 million in assets, is actively managed and focuses on generating long-term returns in excess of those of the Russell 3000 Index.

The fund invests in companies that have delivered robust free cash flow growth, possess strong balance sheets, and have reduced their share count.

By focusing on free cash flow, TrimTabs maintains that its investment process is better able to scrutinize the underlying corporate fundamentals of each company. It posits that management tends to have less discretion on how free cash flow is reported compared to other metrics such as sales, earnings, assets, or liabilities, which can, in some cases, be massaged.

The other pillar of TrimTabs methodology is a focus on share reductions. Companies execute share reductions (i.e.. lowering the amount of shares outstanding) most commonly through stock buybacks, though this can also be accomplished with other corporate actions. This can prove advantageous for investors holding the stock in question, as they end up holding a “larger piece of the pie.”

Since going live on 27 September 2016, TTAC has produced a cumulative return of 49.8% to 8 August 2018, outstripping the 37.4% on the Russell 3000 over the same period.

“By focusing on high quality companies with healthy balance sheets, cash on hand to grow their businesses, and share buyback programs funded by free cash flow rather than debt, investors may have the opportunity to add alpha to their core equity portfolio,” said Janet Johnston, the fund’s co-portfolio manager. “That’s precisely what we set out to do when we constructed TTAC and we’re very pleased with the results. We’re also very excited for what’s to come in the next phase of our growth.”

“Crossing the $100 million mark is an exciting moment for our firm, our investors and for the fund,” she added. “We are strong believers in active management, and in the potential investor benefits inherent in the ETF structure, such as liquidity, transparency and lower costs. To see the marketplace react so positively to what we’re doing with TTAC is very gratifying.”

The ETF comes with an expense ratio of 0.59%.

TrimTabs also offers the TrimTabs All Cap International Free-Cash-Flow ETF (TTAI US) which applies the same philosophy as TTAC but to a global developed ex-US universe. Launched in June 2017, this fund has just $10m. It also comes with an expense ratio of 0.59%.

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