Illinois-based TrueMark Investments has launched its fourth ETF, an actively managed US equity fund targeting firms at the intersection of income, quality, value, and low volatility factor exposures.
Austin Graff, co-CIO at Titleist Asset Management.
The TrueShares Low Volatility Equity Income ETF (DIVZ US) has listed on NYSE Arca and comes with an expense ratio of 0.65%.
The fund is sub-advised by Titleist Asset Management, an investment advisor headquartered in San Antonio, Texas.
DIVZ begins with an initial universe of US-listed securities that offer above-average dividends versus the S&P 500.
Titleist conducts proprietary fundamental research and competitive analysis and meets with company managements to identify 25 to 35 firms with sustainable dividend growth and attractive valuations.
The strategy first identifies companies with established businesses marked by high cash flow, stable revenue streams, and disciplined capital reinvestment programs which may, in turn, experience lower volatility relative to the overall equity market.
Traditional valuation metrics, such as price-to-earnings, price-to-book value, and price-to-cashflow ratios are used to select portfolio constituents with Titleist favouring companies that are attractively priced both in absolute terms and relative to their peers.
While the fund is expected to focus on larger-cap companies – defined as those with market capitalizations greater than $8 billion – it may also include stocks from the mid- and small-cap segments and may hold up to 25% of fund capital in American Depository Receipts.
As of 27 January, the ETF consisted of 29 holdings and offered an attractive dividend yield of 3.76%, significantly above the 0.56% average for the S&P 500. Highlighting the fund’s quality focus, the cashflow yield on the ETF was 6.49% compared to 1.55% for its large-cap benchmark.
The ETF is well diversified across sectors with the largest exposures being health care (18.6%), consumer staples (18.3%), financials (15.4%), communication services (10.8%), and information technology (10.3%). The largest holdings are Walgreens Boots Alliance (4.8%), ViacomCBS (4.1%), Cisco Systems (4.1%), Avangrid (4.1%), and NortonLifeLock (4.0%).
Austin Graff, co-CIO at Titleist Asset Management, commented: “Dividends have historically been important contributors to total return, so we put DIVZ together with an emphasis on dividends. The portfolio goals include attractive growing dividends, long-term capital appreciation, and less volatility than the overall market, a combination that we believe will prove attractive to investors that are focused on risk-adjusted returns.”
Michael Loukas, CEO at TrueMark Investments, added: “We’ve been anticipating the listing of DIVZ for quite some time. The investment philosophy clearly reflects what we believe income-focused equity investing should look like in 2021. With an emphasis on valuations and an understanding that dividend-paying companies tend to be established businesses with high cash flows and steady revenue streams, DIVZ is well-positioned to provide exposure to high-quality companies, while allowing investors access to stable, growing income streams as well as the opportunity for capital appreciation.”