TrimTabs launches international free cash flow ETF

Jun 30th, 2017 | By | Category: Equities

New York-based investment manager TrimTabs Asset Management has launched the TrimTabs All Cap International Free-Cash-Flow ETF (Bats: TTAI), an actively managed fund investing in non-US developed market stocks that are both generating free cash flow, reducing their share count without the use of leverage, and maintaining healthy balance sheets.

TrimTabs launches international free cash flow ETF

The TrimTabs All Cap International Free-Cash-Flow ETF (Bats: TTAI) is TrimTabs Asset Management’s second ETF to focus on free cash flow metrics in its selection process.

Charles Biderman, founder of TrimTabs Asset Management, commented: “Free cash flow is an extremely powerful, useful metric when it comes to evaluating a company which is why it’s integral to TTAI’s methodology.”

By focusing on free cash flow, TrimTabs maintains the methodology is better able to scrutinize the underlying corporate fundamentals of each company. Indeed, 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.

Another pillar of TTAI’s investment methodology is a focus on share reductions. Companies execute share reductions by 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.”

TrimTabs takes an extra step by ensuring that companies executing buybacks are only doing so with free cash flow, not through additional leverage.

The fund will hold on average around 85 companies listed in developed market countries from Europe, Asia, South Asia, and Canada. TTAI is focused on generating long-term returns that exceed those of the S&P Developed Ex US Index, a proxy for the return to the broad international developed market.

The ETFs total expense ratio (TER) is 0.59%.

TTAI is the second free cash flow-centric ETF to be added to the TrimTabs lineup, after the TrimTabs Float Shrink ETF (Bats: TTAC) launched in September 2016, which focuses on US listed companies generating strong free cash flow and reducing share counts. TTAC also has a TER of 0.59%.

“We’re thrilled to be able to expand our free cash flow offerings to encompass non-US based companies as well,” said Biderman. “When used in conjunction with one another, TTAI and TTAC will allow investors to customize their domestic and international free cash flow exposure, all within one product suite.”

Ted Theodore, chief investment officer at TrimTabs Asset Management, added: “The proprietary algorithm is the engine that drives the whole investment process, and we are now able to survey all global equities to find those that meet our criteria.”

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