Specifically, the selection strategy picks holdings based on the number of open market purchases by major corporate insiders and percentage gain in shares per each insider’s purchase; the number of positive revision to price appreciation estimates; and growth trends, valuations and earnings quality.
Most investors have a cursory overview of how a company performs, but corporate executives or high-stakes shareholders will typically be more involved, have more knowledge about the finances of the companies or be in-the-know. Consequently, the average retail investor can gain greater exposure to those in-the-know through the insider sentiment ETFs.
Current top holdings include HP Inc 2.7%, Aflac Inc 2.6%, Chico’s FAS Inc 2.4%, Prudential Financial Inc 2.4% and Evercore Partners 2.4%.
Top sector weights include financials 21.9%, consumer discretionary 17.6%, information technology 14.4%, healthcare 12.9% and industrials 8.6%.
Potential investors should also note that Direxion has announced it will execute reverse share splits for KNOW at 2 for one – investors will receive two shares for each share held – on May 1.
For more information on alternative index-based strategies, visit our Smart Beta Channel.