Amplify ETFs rolled out a new smart beta ETF strategy that switches between fast paced growth stocks and conservative fixed-income assets, depending on overall market trends.
On Thursday, Amplify launched the Amplify EASI Tactical Growth ETF (NYSEArca: EASI), which has a 0.75% expense ratio.
“We believe today’s dynamic markets require core investment strategies that participate in the upside while having the flexibility to potentially protect on the downside,” Christian Magoon, CEO of Amplify ETFs, said in a note. “We believe EASI offers attractive equity exposure via its quantitative selection criteria which incorporates both stock price behavior and fundamentals. Combining this stock selection approach with the ability to rotate into fixed income exposure can be an attractive combination for investors.”
Capture Up Trends, Shields Down Trends
The Amplify EASI Tactical Growth ETF tries to reflect the performance of the EASI Tactical Growth Index, which attempts to take advantage of the investment returns provided during periods of upward acceleration in stock prices while seeking to shield from potential investment losses during periods of downward acceleration in stock prices, according to its prospectus.
Depending on market signals, the underlying index is either in equity or fixed-income assets. The equity allocations may include equity securities and ETFs that invest in large-cap stocks. The fixed-income portion is comprised of five ETFs that cover investment-grade U.S. debt securities.
In determining its allocation tilts, the index follows a “Tactical Allocation Signal.” The Tactical Allocation Signal measures the monthly changes in price of equity components and compares monthly price change to the trailing twelve-month average, with the greatest measuring on the last three months. When the moving average of the underlying index is trending in an upward direction over a twelve-month period, the fund is considered to be in upward momentum. When the upward trend of this moving average reverses to a downward trend, the fund shifts to its fixed-income allocation.
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Current top sector allocations include information technology 28.3%, financials 23.9% and health care 12.0%. Top holdings include Immersion Corp 2.1%, STMicroElectronics 2.1%, Amazon 2.1%, Align Technology 2.0% and Mammoth Energy 2.0%.
For more information on new fund products, visit our new ETFs category.