Investors trying to capitalize on some of the best growth leaders in the markets today may turn to exchange traded funds based off Investor’s Business Daily high-conviction picks.
“Our first ones are based on Investor’s Business Daily research that’s been out forever, and that individual investors love, but they didn’t really have a way to access it and really participate and didn’t understand the products. So we’re working with IBD to bring products based on their research and their following,” Bruce Bond, CEO of Innovator ETFs, said at the Inside ETFs 2018 conference.
Bond also illustrated the point that Innovator also tries to help investors achieve defined outcomes, or “to be able to provide more definitive outcomes to people that are investing in ETFs and in the market in general.”
Regular readers of Investor’s Business Daily may be well-acquainted with the publication’s venerable IBD 50, a group of fundamentally sound leading stocks displaying impressive relative strength.
After partnering with Innovator Management, the IBD can now be accessed through an ETF wrapper in the form of the Innovator IBD 50 Fund (NYSEArca: FFTY).
FFTY adheres to the CAN SLIM formula pioneered by IBD founder William J. O’Neil. CAN SLIM combines traits such as a company’s current and annual earnings (rising of course), new, innovative products, leadership in a given industry, increased institutional ownership and other factors.
Bond explained that FFTY follows a high turnover, with the underlying portfolio rebalancing on a weekly basis. The so-called IBD 50 picks are constantly being updated, and if the average retail investor were to adhere to the formula, he or she would likely incur hefty trading costs and deal with the tax fallout in executing the trades. On the other hand, the ETF is seen as a cost-effective and efficient way to access IBD’s investing methodology.
Innovator has also come out with the Innovator IBD ETF Leaders ETF (LDRS), a kind of ETF-of-ETFs that uses proprietary relative strength analysis to select various asset classes that show market-leading relative strength, including foreign and domestic equity and fixed income securities, along with other alternative asset classes.
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