In another sign that investors continue to embrace exchange traded funds that offer exposure to companies returning cash to shareholders, the AdvisorShares TrimTabs Float Shrink ETF (NYSEArca: TTFS) has topped the $100 million in assets under management mark.
To be precise, TTFS finished with $105.3 million in AUM at last Friday’s close. The ETF debuted in early October 2011. The $100 million in assets level is viewed as pivotal by many industry observers because a widely held belief is that $100 million is necessary for an ETF to be profitable for the issuer.
Actively managed, TTFS does not focus solely on companies engaged in share buybacks. Sub-advised by TrimTabs Asset Management, TTFS is an equal-weight fund that focuses on companies that have reduced their shares outstanding over the prior 120 days. The ETF’s holdings are selected based on three primary criteria: Shareholder friendliness via float shrinkage, profitability measured by free cash flow and balance sheet sturdiness measured by leverage ratio. TTFS has a free cash flow yield of almost 8.1%, according to issuer data.
Broader market shrinkage, be it through mergers and acquisitions, delistings and share repurchases, has helped propel TTFS to an almost 38% gain over the past year. The fund is up 1% to start 2014. [Market Shrinkage Boosts Some ETFs]
Members of the S&P 500 increased share buybacks by 8.6% during the third quarter to $128.2 billion up from the $118.1 billion spent on share repurchases during the second quarter, according to S&P Dow Jones Indices. Through the end of the third quarter 2013, U.S. companies had spent $445.3 billion on share repurchase plans. [Stock-Picking Buybacks has Mixed Results]
At the end of the fourth quarter, TTFS allocated a combined 43% of its weight to the consumer discretionary and technology sectors. Industrials accounted for 16% of the fund’s weight while financial services and health care each had allocations of 12%.