Amplify ETFs has launched a new exchange-traded fund providing exposure to multiple investment themes by targeting the companies most widely owned by US-listed thematic ETFs.
Christian Magoon, CEO of Amplify ETFs.
The Amplify Thematic All-Stars ETF (MVPS US) has been listed on NYSE Arca and comes with an expense ratio of 0.49%.
The fund is linked to the ETF All-Stars Thematic Composite Index which was developed by ETF Action, a financial data and research firm focused on the ETF industry.
The index harnesses ETF Action’s proprietary classification system to identify US-listed equity ETFs that target one of the following thematic segments: disruptive technology, evolving consumer, fintech, health care innovation, industrial revolution, sustainability, or multi-thematic.
Eligible ETFs must focus on US or global equity markets, with cannabis ETFs explicitly excluded from the selection.
The methodology then calculates an ‘ownership-adjusted market value’ (OAMV) for each company held within the ETFs to determine how popular a firm is amongst thematic ETF investors. The OAMV is determined by multiplying the total dollar value invested in a company across the qualifying ETFs, subject to a 10% influence cap per ETF, by the number of qualifying ETFs that hold that company.
The index selects the companies with the largest OAMVs while targeting 75% of the total OAMV across the eligible universe. Constituents are weighted by OAMV subject to a cap of 5%. Reconstitution and rebalancing occur on a monthly basis.
The index contains 165 stocks, compared to more than 3,200 in the initial universe.
US-listed companies make up over three-quarters (77.9%) of the portfolio by weight while developed ex-US and emerging market stocks each account for roughly 10%. Information technology stocks dominate with over half (56.6%) of the total weight, followed by consumer discretionary (12.6%), communication services (9.4%), and industrials (7.3%).
Notable positions include Tesla (5.0%), NVIDIA (4.6%), Square (2.9%), Alphabet (2.8%), Amazon.com (2.7%), EnphaseEnergy (2.5%), and Zscaler (1.8%).
Based on back-test data, the index has notably outperformed over the past three years with a return of 127.8% (as of 19 July 2021) compared to 103.3% for the Nasdaq 100 and 62.1% for the S&P 500 over the same period.
Christian Magoon, CEO of Amplify ETFs, said: “The proliferation of thematic ETFs has left investors with a series of questions. Which themes should I own? How much should I allocate to each theme? How do I focus on consensus pure play stocks representing a theme? When should I rebalance my exposure? MVPS helps address these questions and provides a convenient solution for investors who want to own themes without the hands-on research needed to identify thematic opportunities.”
Mike Akins, CEO & Founding Partner of ETF Action, added: “The ETF All-Stars Thematic Composite Index is the first-ever strategy to leverage the growth and transparency of thematic ETFs to establish a consensus view on which companies best align with innovative trends across the world economy. We are thrilled to partner with Amplify, a clear leader in the thematic ETF space, to make this strategy available to investors.”