Quick — what’s the worst stock in your client’s portfolio? You may not know, but under the hood of all that vanilla exposure, there are, by definition, stocks that it will be better not to own. Wouldn’t it be great if you had a methodology that let you avoid those companies in the first place?
In the upcoming webcast, Excellence Without Emotion: A Better Investment Process, New Age Alpha’s co-founder and CIO Julian Koski and senior portfolio manager Andy Kern, PhD, will dig deep into the methodology of an approach that seeks exactly that: Winning by not losing.
“In today’s environment, investors seek tools that look beyond simple beta exposure and thematic strategies,” according to New Age Alpha. “Avoiders offer the precision of what we believe is a unique investment strategy that can be applied with confidence across existing asset allocations to potentially deliver an innovative source of alpha and an uncorrelated source of return.”
Specifically, the AVDR US LargeCap Leading ETF (CBOE: AVDR) seeks to track the performance of the New Age Alpha U.S. Large-Cap Leading 50 Index.
According to New Age Alpha, investors think in terms of picking winners, when their goal should be seeking to avoid the losers. AVDR aims to outperform by using the human factor to avoid the companies that are most likely to fail to deliver the growth implied by their stock price.
Starting with a known investment universe, the S&P 500, AVDR identifies and removes the 450 companies with the highest human factor score to create a portfolio of 50 stocks with the lowest human factor.
Combining the alpha potential of active management with the advantages of rules-based investing, AVDR seeks to outperform existing large-cap benchmarks.
Additionally, the AVDR US LargeCap ESG ETF (CBOE: AVDG) seeks to track the performance of the Alpha U.S. Large-Cap ESG Index.
Similar to AVDR, AVDG aims to outperform by avoiding low-rated ESG companies that they believe are most likely to fail to deliver the growth implied by their stock price. Starting with a known investment universe, the Refinitiv U.S. Total Return Index, AVDG applies negative screening to remove all but the highest-rated ESG companies and stocks with the lowest human factor to create a portfolio of 50 highly-rated ESG stocks that provide the potential to outperform.
Financial advisors who are interested in learning more about the investment methodology can register for the webcast here.