Many exchange traded funds that are positioned as “core” funds are prosaic in their approach. That is not a negative. Plenty of core equity ETFs offer diversified portfolios and low costs, but there are ways to access the core with ETFs.
Consider the Vident U. S. Core Equity Fund (NasdaqGS: VUSE). Just over a year old, VUSE tracks the Vident Core U.S. Equity Index (VIUSX), “a strategy seeking to highlight companies which exhibiting higher levels of leadership and corporate governance and trading at attractive valuations,” according to Vident Financial.
That is to say VUSE is a strategic beta, but its methodology is even more unique than rival, diversified U.S. equity smart ETFs. VUSE “seek to represent a portfolio of US companies that adhere to higher standards of corporate governance and accounting, as measured by numerous research metrics,” according to Vident. [Vident Launches Core U.S. ETF]
Vident’s research is then applied across large-, mid- and small-caps, bringing the VUSE portfolio to about 500 members with sector risk approach.
VUSE starts its selection universe with 3,000 companies with market values of at least $500 million and average daily volume of at least $1.5 million. From there, the top 80% as ranked by corporate governance, financial reporting and expense recognition are selected. [Interesting New ETFs]
VUSE’s methodology is starting to bear fruit. Over the past month, the ETF has topped the S&P 500 by 80 basis points and VUSE hit an all-time high last Friday. VUSE also features a bit of a value tilt because financials and technology are two of the more attractively valued sectors relative to the S&P 500. Those sectors combine for over 36% of the ETF’s weight. On the other hand, the richly valued consumer staples, energy and utilities sectors combine for less than 18% of VUSE’s weight.
No holding accounts for more than 0.7% of VUSE’s weight and top 10 holdings include Dow components Wal-Mart (NYSE: WMT) and Verizon (NYSE: VZ) along with Kellogg (NYSE: K) and Avon Products (NYSE: AVP).
VUSE was quick top $100 million in assets under management, needing just four months of trading to accomplish that important ETF feat. The ETF’s asset-gathering prowess has continued to gain momentum as VUSE is now home to $350.3 million in assets.
Vident Core US Equity ETF
