With diversification a top priority, WCM has parameters in place to ensure the portfolio remains diversified. “We own companies in at least 15 different industries, with maximum industry exposure capped at 15%, while sector size is capped at 45%,” says Duff Daniels, WCM’s managing director. The fund has a large-cap bias with a maximum of 30 holdings at any given time, with an emphasis on fundamental research rather than technical or quantitative. [Mutual Fund to ETF Conversions: What You Should Know.]
There’s a reason the holdings are kept to a relative few. “We want to own only our best ideas, and own them in a meaningful weighting in the portfolio. We don’t want to dilute the portfolio with inferior ideas just to own more names” Daniels says. “The large-cap bias means $3.5 billion or greater, with emphasis on quality growth attributes like high return on capital, low or no debt and predictability in the business model.”
Emerging market components are capped at 35% (although it’s historically been closer to 25%). “We are invested in large, established, multi-national businesses, many of which derive substantial revenue from the developed world, including the United States, despite their being domiciled in emerging markets countries.” [Misconceptions About Actively Managed ETFs.]
WCM is proud of their strategy and this new fund. “We’re not a firm that rolls out products every other day. This strategy presents a unique opportunity, and our partnership with BNY and AdvisorShares creates an investment vehicle in the ETF which makes the strategy available to all investors.”
For more information on new ETFs, visit our new ETFs category.
Max Chen and Heather Hayes contributed to this article.