ROC Investments has launched the world’s first ETF composed of companies exclusively selected based on the behaviours of their CEO and senior executive teams, the ROC (Return On Character) ETF (Cboe: ROCI).
ROC seeks long-term capital appreciation by investing in character-led organisations. ROC Investments, the manager of the strategy, believes the market consistently misprices the value of exceptional character over the long-term, by not measuring it at all. ROC Investments has built an actively managed strategy to invest solely on the basis of the character of corporate leadership. The core strategy will be to identify and buy US companies with management behavior that exemplifies the highest level of character.
“The four pillars of ROC’s character model – Integrity, Responsibility, Forgiveness, and Compassion – are the same principles parents seek to instill in their children, and yet they are often found lacking in the financial world. Far more than exterior characteristics like education, tenure, politics, age, industry or religion, it is these interior traits that determine character. Our hope is that the ROC ETF will show that not only does character matter, but it is the best way to live and invest,” says Dan Cooper, Founder and CEO of ROC Investments.
ROC is based on academic research by global consulting firm KRW International, which found a consistent, observable and measurable relationship between senior leadership character and an organisation’s ability to execute its strategy. Leadership teams with high character scores showed higher profitability (as measured by return on assets), higher workforce engagement and lower levels of corporate risk.
The fund’s portfolio will generally hold 75 to 150 stocks with the highest Composite Character Scores, weighted to mirror the return profile of traditional, broad-based US securities. Weightings will be evaluated and modified quarterly, and character scores will be re-evaluated on an annual basis.