New Age Alpha, an asset management company that provides the global investment community with ETFs, indexes, SMAs, data and tools, has launched two Avoider ETFs, AVDR US LargeCap Leading ETF AVDR) and AVDR US LargeCap ESG ETF (AVDG).
The alpha-seeking ETFs aim to provide an innovative source of alpha and an uncorrelated source of return by avoiding the losers – stocks believed to be overpriced.
Tracking the New Age Alpha US Large-Cap Leading 50 Index and the New Age Alpha US Large-Cap ESG Index, the Avoider ETFs follow New Age Alpha’s proprietary methodology, which is the process of using a probability, the Human Factor, to avoid the losers. The Human Factor is the probability a company will fail to deliver the growth implied by its stock price – and this occurs when investors impound vague or ambiguous information into a stock price. By providing exposure to a portfolio that consists of 50 stocks with the lowest Human Factor, AVDR and AVDG seek to provide an innovative source of alpha and diversification from traditional investment approaches.
“In today’s environment, investors seek tools that see beyond beta exposure and complicated thematic strategies. AVDR and AVDG represent the next wave of innovation in alpha-seeking ETFs by combining the alpha potential of active management with the advantages of rules-based investing,” says Julian Koski, Co-founder and CIO at New Age Alpha. “We are excited to offer the Avoider ETFs alongside our full scope of portfolio solutions and tools that help advisors, institutions and investors build better portfolios.”
New Age Alpha’s AVDR US LargeCap Leading ETF (AVDR) seeks to deliver alpha over existing large-cap benchmarks by using the Human Factor to avoid overpriced companies. Starting with the S&P500, AVDR identifies and removes 450 stocks with the highest Human Factor scores, resulting in a portfolio that consists of the 50 stocks with the lowest Human Factor that seeks to deliver alpha over existing large-cap benchmarks.
New Age Alpha’s AVDR US LargeCap ESG ETF (AVDG) seeks to deliver alpha and ESG responsibility simultaneously by combining the Human Factor with the most highly rated ESG companies, resulting in a fully integrated risk managed ESG solution weighted by market capitalisation. Starting with the 600 US stocks with the largest free-float market cap, AVDG removes all but those with the highest Refinitiv ESG rating. The remaining stocks are ranked based on a combination of ESG rating and the Human Factor and the fund invests in the top 50 which results in a portfolio that seeks to deliver alpha over existing large-cap ESG benchmarks.
