On Tuesday, Split Rock Trading made its first foray into the ETF space with the North Shore Equity Rotation ETF (NYSE Arca: KOOL).
The fund is actively managed and prioritizes investing in equity sectors in order to beat the performance of the S&P 500 Index. KOOL presents a net expense ratio of 0.94%.
In ideal conditions, the fund aims to invest the majority of assets into both U.S. and foreign equity securities. The fund prospectus notes the fund may achieve these exposures by investing in other ETFs.
Investment Strategy
As part of the fund’s active management strategy, Split Rock Trading evaluates the current state of the U.S. economy. It uses this evaluation to choose sectors believed to perform well at the time. The prospectus adds that this research includes both current and forward looking economic indicators. The indicators include GDP and consumer spending numbers. Four stages – recession, recovery, expansionary, and slowdown – are used as guidelines to determine the state of the U.S. economy.
When selecting individual assets, Split Rock uses both fundamental and technical factors to evaluate the strength of securities. From there, the advisors use both buy-side and sell-side research to help make the final selections.
Along with equity investments, Split Rock may also choose to add fixed income exposures, including options, to KOOL’s portfolio in order to generate additional income. Up to 20% of the fund’s total assets may be invested in fixed income, and the fund selects those exposures by considering criteria such as duration, credit quality, and the current state of the general economy.
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