“The IBD ETF Leaders Index represents a unique approach to constructing a tactical portfolio of ETFs using IBD’s time tested research to identify top performing ETFs. Beginning with a comprehensive evaluation of all ETFs across global equity, fixed income, alternative and cash opportunities without issuer bias, the highest scoring ETFs are included and equally weighted within the Index on a monthly basis,” Chris Gessel, Chief Content Officer of IBD, said in a note.
The two ETFs are seen as a cost-effective and efficient way to access IBD’s investing methodology.
“FFTY exemplifies the ETF structure. It has never issued a capital gains distribution,” Day said. We can thank the investment vehicle for this because of the efficiency of the ETF structure.”
The so-called IBD 50 picks are constantly being updated, and if the average retail investor were to adhere to the formula, he or she would likely incur hefty trading costs and deal with the tax fallout in executing the trades. Day pointed out that there is a 25% turnover each week in the 50, which translates to 1,000 turnover each year.
Furthermore, LDRS, which acts as an ETF-of-ETFs, also allows investors to garner exposure to a diversified set of various markets through a single investment. If an investor were so inclined to mimic the strategy, he or she would have to take on 25 different trades. Furthermore, unlike other fund-of-funds strategies, LDRS is agnostic in its approach to ETF select, so ETFs of any provider is on the table as long as it can generate alpha.
“LDRS allows IBD to access any where in the market for appreciation, and we use other providers in constitution, which gives you an objective way to invest in ETFs in the market,” Day added.