AdvisorShares this week launched a new exchange traded fund with an investment objective based on research from TrimTabs Investment Research.
The new addition is AdvisorShares TrimTabs Float Shrink ETF (NYSEArca: TTFS) and the portfolio management team of the ETF is a part of TrimTabs Asset Management.
“Top insiders at a firm know more about its fundamentals than the investing public. We have discovered that it has been strategic over the years to buy the overall market when the trading float of shares is shrinking; and to sell the overall market when the trading float of shares is growing. We have discovered that float shrink, free cash flow and debt/equity analysis have been good indicators in determining future performance of stocks,” Charles Biderman, founder and chief executive of TrimTabs, said.
TTFS has a strategy that selects the top 100 U.S. stocks based upon float shrink, free cash flow growth, and net equity ratios from the largest 3,000 U.S. based companies. Then those 100 stocks are equally weighted and periodically reallocated and rebalanced as corporate metrics change. Companies that not borrowing more and are growing free cash flow and are using that cash to shrink the trading float of shares could outperform, according to a press release.
The ETF will compete with the Russell 3000 Index, simply by picking stocks with less volatility than the index, reports Oliver Ludwig for Index Universe.
“We believe investors will be excited about TTFS because it is a fundamentally attractive alternative for U.S. equity market exposure to a Russell 3000 or the S&P 500,” said Noah Hamman, CEO of AdvisorShares. “Why own the entire U.S. market when you can buy the 100 companies shrinking their trading float of shares, growing cash flow and not borrowing to buy back shares?”
AdvisorShares has 12 ETFs trading currently, 10 of which are actively managed. The provider has about $166 million in assets under management.
Tisha Guerrero contributed to this article.