Innovator Capital Management rolled out a fund-of-funds styled exchange traded fund that helps investors target market momentum through a relative-strength based smart beta indexing methodology.
On Thursday, Innovator Capital Management launched the Innovator IBD ETF Leaders ETF (LDRS), which has a 1.16% expense ratio, according to a prospectus sheet. The management fee of the ETF is 0.60% and the acquired fund fees are 0.56%, based on today’s underlying basket of ETFs, which may vary greatly over time due to monthly changes.
The Innovator IBD ETF Leaders ETF will try to reflect the performance of the IBD ETF Leaders Index, a rules-based index developed by Investor’s Business Daily to outperform the broader equity and fixed income markets.
IBD uses proprietary relative strength analysis to select various asset classes that show market-leading relative strength, including foreign and domestic equity and fixed income securities, along with other alternative asset classes.
The so-called relative strength is a technique that determines the strongest performing securities by measuring certain factors, like a security’s relative performance against the overall market or a security’s relative strength value, which is found by comparing the rate of increase of the security’s price versus to the broader benchmark index.
Underlying components may include small-, mid- and large-capitalization companies located in either developed or emerging markets and in securities of any credit quality, including “junk” securities.
LDRS may also act as a fund-of-funds as its initial universe for the Index is composed of all U.S.-listed exchange traded funds. Underlying funds include those with an average daily trading volume of greater than 100,000 shares over the previous 50 days, trading above their average 6-month price and show returns higher than those of the S&P 500 Index over the course of the previous three months.
Innovator also offers another strategy based of IBD research, the Innovator IBD 50 Fund (NYSEArca: FFTY). Regular readers of Investor’s Business Daily are well-acquainted with the publication’s venerable IBD 50, a group of fundamentally sound leading stocks displaying impressive relative strength that are selected by IBD’s signature investing tool, targeting companies that are generating outstanding profit growth, big sales increases, wide profit margins and a high return on equity.
For more information on new fund products, visit our new ETFs category.
CORRECTION: Clarification on underlying indexing methodology.