The popularization of the Moneyball movie and progress in the fields of statistics and behavioral economics have moved to the field of finance, particularly when it comes to matters of investing and portfolio management. Yet many advisors, overly confident in their choices and often blind to their own biases, still think that they can consistently pick the winners of tomorrow today.
In the upcoming webcast, How Moneyball Principles Can Protect Your Portfolio, Julian Kosk, co-founder and chief investment officer at New Age Alpha and Andy Kern, senior portfolio manager at New Age Alpha, will — like the Oakland Athletics — focus on the numbers to avoid strikeouts in today’s market.
“Avoiders – a new family of alpha-seeking ETFs that aim to outperform known investment universes by seeking to avoid the losers,” are what New Age Alpha offers.
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.
“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,” according to New Age Alpha.
Financial advisors who are interested in learning more about a rules-based investment strategy can register for the Monday, September 27 webcast here.