On Wednesday, TrimTabs launched the TrimTabs Float Shrink ETF under the ticker (BATS: TTAC). TTAC has a 0.59% expense ratio.
Investors who are getting a sense of déjà vu should recognize the fund as the AdvisorShares Wilshire Buyback ETF (NYSEArca: TTFS) use to be called the AdvisorShares TrimTabs Float Shrink ETF before the sub-advisor was switched back in July 1.
The new TrimTabs FLoath Shrink strategy will bring its proven proprietary algorithmic approach to ETF investors.
“The proprietary algorithm is the secret sauce that helps make the whole thing tick, helping us implement the Fund’s active methodology,” Ted Theodore, Portfolio Manager at TrimTabs Asset Management, said in a press release.
TTAC will try to generate long-term returns in excess of the total return or outperform the Russell 3000 Index, with less volatility than the benchmark index, by selecting 100 companies that are both generating free cash flow and diminishing share count without the sue of leverage.
Current top holdings include Southwest Airlines (NYSE: LUV) 1.0%, Integrated Device Technology (NasdaqGS: IDTI) 1.0%, Nvidia Corp. (NasdaqGS: NVDA)1.0%, Myriad Genetics (NasdaqGS: MYGN) 1.0% and HP Inc (NYSE: HPQ) 1.0%.
“Free cash flow is the gold standard when it comes to evaluating a company,” Charles Biderman, Founder and CEO of TrimTabs Asset Management, said, “which is why it’s integral to TTAC’s methodology.”
Free cash flow can be seen as an indicator of a company’s financial health, providing closer scrutiny of underlying corporate fundamentals, and allowing for easier identification of quality companies with growing cash reserves. Management has discretion in how they report sales, earnings, assets, and liabilities. However, free cash flow is much less likely to be subject to the same financial wizardry.
Moreover, the ETF also focuses on share reduction, “float shrink” or buybacks, where companies execute share reductions by diminishing the amount of shares outstanding. The float shrink strategy helps provide further value to the investor as people end up holding a “larger piece of the pie.”
For more information on new fund products, visit our new ETFs category.