“This drop was led by a significant increase in weight towards small-caps, categorized as companies with a market cap below $1 billion, from 16% (64 stocks) to 22% (88 stocks),” according to the fund provider.
Additionally, energy sector exposure has been cut by more than half from 9.25%, or 37 companies, to 4%, or 16 companies. The index also added five new energy names, including refiners and pipeline companies, which suggest that B400 still finds value in names in the sector but only in areas that aren’t at risk in light of the drop in fuel prices.
“Contrary to what many think given today’s slower growth environment, B400 shows U.S. companies with attractive fundamentals and growth prospects are still to be found,” Carlos Diez, CEO and Founder of MarketGrader, said in the press release. “Not surprisingly, the growth profile of current constituents is across the board better than for the previous selection class.”
Overall, the Barron’s 400 Index is bullish on the U.S. economy, with a heavy tilt toward financials and industrials at 20% each, followed by consumer discretionary 19.3% and technology 13.4%.
“With a laser focus on earnings, B400 continues to see the most opportunity in sectors reflecting the ongoing cyclical improvement in the U.S. economy, which is encouraging given recent market conditions,”Diez added.
For more information on ETF indices, visit our indexing category.
Max Chen contributed to this article.