FormulaFolios Investments expands on its ETF suite with two more actively managed strategies that focus on growth by incorporating quantitative algorithms to craft the portfolios.
FormulaFolios Investments rolled out the actively managed FormulaFolios Smart Growth ETF (CBOE: FFSG) and FormulaFolios Tactical Growth ETF (CBOE: FFTG), which have a 0.71% expense ratio and a 1.00% expense ratio, respectively.
Jason Wenk, Founder and Chief Investment Officer of Formula Investments, and Derek Prusa, Senior Market Analyst of Formula Investments, will act as the portfolio managers.
The FormulaFolios Tactical Growth ETF is an actively managed ETF that is a fund of funds and will try to generate long-term total return. It will seek its objective by investing in foreign and domestic growth-oriented equity securities of any market capitalization, domestic investment grade fixed income securities of any maturity or duration, domestic real estate investment trusts, and commodities securities through unaffiliated ETFs, according to a prospectus sheet.
The portfolio managers will utilize a proprietary investment model to rank 5 major asset classes, which include US stocks, foreign stocks of developed countries, real estate, gold, and US aggregate bonds, based on the strongest price momentum or the rate of the rise or fall in stock prices. The three highest-ranked asset classes are allocated to the portfolio with equal weightings, and the two lowest ranked asset classes are left out of the portfolio.
In addition, asset classes not displaying positive momentum are not included in the portfolio even if they are one of the three highest ranked asset classes.
Related: Getting Cautious on Junk Bond ETFs
The FormulaFolios Smart Growth ETF also acts like a fund-of-funds and will seek to provide capital growth. It will primarily invest in domestic and foreign growth-oriented equity securities of any market capitalization, along with US Treasuries or other cash equivalents.
FFSG will be 100% invested in growth-oriented equity ETFs when the advisor’s investment models indicate a bullish trend in equities. The fund, though, will be 50% invested in growth-oriented equity ETFs and 50% invested in US treasuries and/or other cash equivalents when the models indicate a bearish trend for the equity markets.
FFSG’s investment model is based on technical momentum, economic, and behavioral analysis indicators used to determine if the market is doing well or poorly, including moving average crossovers, oscillators, price acceleration measurements, labor market data, market breadth data, earnings data and analyst sentiment data.
For more information on new fund products, visit our new ETFs category.