The TrimTabs All Cap US Free-Cash-Flow ETF (Cboe: TTAC), which is nearly two years old, recently topped $100 million in assets under management. As of August 8, 2018, TTAC assets under management totaled $105.1 million.
“TTAC, which began the year with $38 million in assets, is an actively managed ETF that focuses on generating long-term returns in excess of those of the Russell 3000 index,” according to a statement. “The Fund is built around TrimTabs’ expertise in selecting companies that have generated strong free cash flow growth, improving balance sheets and reducing their share count.”
TTAC tries 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.
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.
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“Since going live on September 27, 2016, TTAC has returned 49.78 percent (cumulative NAV, through August 8, 2018). Over that same time frame, its benchmark Russell 3000 has returned 37.40 percent,” according to the statement.
None of TTAC’s holdings exceed weights of 1.50%. The fund allocates 45% of its combined weight to the technology and consumer discretionary sectors. Financial services and healthcare stocks combine for over 28%.
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.”
TTAC charges 0.59% per year, or $59 on a $10,000 investment.
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