There have been plenty of new ETF launches in the past six to twenty four months, giving a good base of fresh material for new coverage and development of trading strategy for those involved in the markets.
We have not previously covered several ETFs issued by the provider Compass EMP, but then again these funds only debuted in July of last year. Compass Efficient Model Portfolios LLC (“Compass EMP”) is based
in Brentwood, TN and in addition to managing four ETFs currently, the firm also provides mutual funds, SMAs, and also operates in the 401k space according to firm literature. We see CDC (Compass EMP U.S. Equity Income 100 Enhanced Volatility Weighted ETF, Expense Ratio 0.68%) as the largest of current ETF offerings, all having debuted once again in July of last year, as the fund currently has about $57 million in assets under management, certainly a respectable amount for a newer fund that is not necessarily on every radar as of yet.
This fund traded more than 263,000 shares yesterday in comparison to its ADV of about 24,000 shares. Categorized in the “Large Cap Value” segment of U.S. Equity, fund literature states that “Compass EMP believes combining a fundamental criteria with individual security risk control through volatility weighting and downside hedging can improve the investor’s ability to outperform both traditional indexes as well as active investment portfolios over the long-term.”
Given the obvious appetite that retail and institutional investors like ETF model managers have displayed in the past three plus years for “Low Volatility” or managed volatility strategies when it comes to equity allocations, (i.e. SPLV, USMV), it does not shock us that these volatility based funds from Compass EMP have had a warm reception in a short amount of time.
Based on the proprietary strategy which holds one hundred individual names isolated from the greater CEMP U.S. Large Cap 500 Volatility Weighted Index, we see current weightings favoring Utilities (>24%), Consumer Staples (>16%), and Financials (>11%), and we see some familiar names among the top individual holdings like WMT, MCD, and PG.