The Barron’s 400 ETF Undergoes Semi-Annual Rebalance, Sees Strengthening Fundamental Scores of Company Constituents

The Barron’s 400 ETF (NYSE ARCA: BFOR), a smart beta exchange traded fund that seeks to track the Barron’s 400 Index (B400), has completed its semi-annual rebalance based on the reconstitution of its underlying benchmark. The rules-based and fundamentals-driven B400 was designed to give investors a means of tracking some of America’s highest-performing companies based on the strength of their financial statements and the attractiveness of their share prices. B400 was jointly developed by Barron’s, America’s premier financial magazine, and MarketGrader, an independent equity research and indexing firm with a proprietary fundamental methodology, and launched in 2007.

Some of the more prominent additions were American Airlines, entering the underlying Index for the first time ever, Allergan, Ameriprise Financial, Celgene and Starbucks. Some of the notable deletions include Wells Fargo, Verizon, International Business Machines, McDonald’s and Lowe’s Companies.

The rebalance sees the average fundamental score of constituents rise; the average MarketGrader overall grade for B400 companies is now 69.7 compared to 65.7 for the September 2014 rebalance, a trend seen throughout B400’s rebalance history. MarketGrader’s equity rating system assigns nearly all investable U.S. stocks a grade on a scale of 0-100 based on a proprietary combination of 24 indicators of growth, value, profitability and cash flow, picking the top ranking companies for BFOR’s underlying Index after screening for size and sector diversification as well as liquidity.

Carlos Diez, CEO and Founder of MarketGrader said, “Our adherence to a consistent growth-at-a-reasonable price stock selection strategy has been central to BFOR’s ongoing results, seeking companies that create shareholder value and capital appreciation over the long-term. At each rebalance, new entrants with high fundamental scores replace companies whose grades have eroded both as a result of lackluster financial results and due to slippage in their value grades when rapid increases in their stock prices outstrip their underlying fundamental growth.”

On a net basis, Health Care showed the biggest increase in sector representation and now accounts for 9.75% of the Index. Technology showed the biggest reduction in sector representation, losing ten companies and now accounting for 12.75% of the Index.

The top three most represented sectors – Consumer Discretionary (19%), Financials (20%, the maximum allowed for any sector) and Industrials (19%) – remained the same. “These sectors’ continued favor in our rigorous, rules-based fundamental selection process is reflective of the continued improvement in the U.S. economy, considering the sensitivity of the sectors’ earnings to the business cycle,” added Diez.

Notably, the Energy sector recorded no total change in representation, remaining at 9.5% of the Index. “The fact that Energy remained fairly well represented, with 38 names, suggests B400 has found a good balance between deteriorating financials – such as revenue, margins and net income – and improving valuations since oil prices began to slide last year,” commented Diez.

From a size perspective, the newly reconstituted B400 has an average market capitalization of $19.3 billion compared to $22.3 billion following the previous rebalance in September 2014. The 104 large-cap names, categorized as companies with a market cap above $10 billion, comprise 26% of the Index. Mid-caps, companies with market cap from $1 billion to $10 billion, have 223 members, representing 55.75% of the Index. Small-caps, companies with market cap below $1 billion, account for 18.25% with 73 members. “This size composition is historically consistent for B400, whose ‘sweet spot’ has always been the mid-cap segment of the market,” reflected Diez.

In total, 155 companies were added to the Index upon the rebalance, a turnover rate of 38.75%, which is slightly below B400’s historical average of 41.76% since inception.

The constituents are equal weighted, each representing 0.25% of the Index. “This allows each company to contribute equally to the whole, thus eliminating the tendency in traditional market capitalization weighted indexes of the largest companies to disproportionately impact performance,” added Diez.

There are the 19 companies that have been in the Index for at least five consecutive years, including Apple, Chipotle Mexican Grill and Priceline.

For more information about the Barron’s 400 ETF (BFOR), under the ALPS ETF Trust, please visit http://www.barrons400etf.com

Important Disclosures

An investor should consider investment objectives, risks, charges and expenses carefully before investing. To obtain a prospectus, which contains this and other information, call 1.855.724.0450 or visit www.barrons400etf.com. Read the prospectus carefully before investing. There are risks involved with investing in ETFs including the loss of money. Additional information regarding the risks of this investment is available in the risks section of the prospectus.

Barron’s 400SM ETF shares are not individually redeemable. Investors buy and sell shares of the Barron’s 400SM ETF on a secondary market. Only market makers or “authorized participants” may trade directly with the Fund, typically in blocks of 50,000 shares.

Funds that emphasize investments in small/mid cap companies will generally experience greater price volatility. Diversification does not eliminate the risk of experiencing investment losses.

ALPS Portfolio Solutions Distributor, Inc., 1290 Broadway, Ste. 1100, Denver, CO 80203 is the distributor for the Barron’s 400SM ETF.

“The Barron's 400 IndexSM” is calculated by NYSE Euronext or its affiliates and published by MarketGrader. “Barron's®," "Barron's 400SM” and "Barron's 400 IndexSM" are trademarks or service marks of Dow Jones & Company, Inc. or its affiliates and have been licensed to MarketGrader. One cannot invest directly in an index.

Top 10 Holdings^ as of 12/31/2014
Hawaiian Holdings Inc 0.43%
Universal Insurance Holdings 0.39%
Inteliquent Inc 0.38%
Stamps.com Inc 0.38%
USANA Health Sciences Inc 0.35%
AmTrust Financial Services 0.35%
Blackhawk Network Holdings I 0.34%
Ambarella Inc 0.33%
Overstock.com Inc 0.33%
Maximus Inc 0.33%

^ Holdings are subject to change.

Smart Beta: Investment strategies that emphasize the use of alternative weighting schemes to traditional market capitalization based indices.

ALPS, A DST Company, and ALPS Portfolio Solutions Distributor, Inc. are not affiliated with Barron’s or MarketGrader.

BAR000132 3.23.16

Contacts:

ALPS, A DST Company
Patricia Lobato, 303-623-2577

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