The Validea Market Legends ETF (NasdaqGM: VALX), an actively managed exchange traded fund, that selects and scores stocks using proprietary models based on the approaches of famous investors such as Warren Buffett and Peter Lynch, is boosting its exposure to the healthcare sector.
Using impressive scores from the firm’s Peter Lynch model, Validea added to VALX stakes in Dow component Merck (NYSE: MRK) and biotech giants Gilead Sciences (NasdaqGS: GILD) and Celgene (NasdaqGS: CELG) .
As of May 14, Gilead represented 0.95% in VALX while the ETF allocated 0.91% to Celgene and 0.88% to Merck, according to issuer data. None of VALX’s 100 holdings command a weight north of 1.64%.
“According to Justin Carbonneau, partner at the firm, the fund recently conducted its monthly rebalancing. On these rebalancing dates, approximately 1/10th of the portfolio (or 10 out of 100 holdings) is rebalanced once every 28 days. During each rebalancing, stocks that have fallen in score are replaced with higher-scoring securities. This monthly holding review process is different than many other ETFs, which may follow a quarterly or even less frequent rebalancing process. Carbonneau goes on to say that the rebalancings, which take place on a 28 day cycle, are a key part of disciplined investment process that goes into the fund and it allows the strategy to take into consideration the most recent fundamentals and price movements on stocks in an effort to find the best ideas in real-time,” according to Validea.