LeaderShares has doubled its ETF lineup with the launch of two new actively managed US equity strategies on NYSE Arca.
LeaderShares has launched two new actively managed ETFs on NYSE Arca.
The LeaderShares Activist Leaders ETF (ACTV US) invests in companies that are the target of shareholder activism, while the LeaderShares AlphaFactor Tactical Focused ETF (LSAT US) selects firms that are expected to deliver alpha according to a multi-factor model that may substantially de-risk in certain market conditions.
The ETFs are issued and managed by Redwood Investment Management, a Los Angeles-based, quantitatively oriented adviser with circa $1.5bn in assets.
The ‘Activist Leaders’ ETF invests in US-listed companies with market capitalizations of at least $1 billion. The strategy identifies firms that are the target of shareholder activism by tracking legally mandated 13D filings submitted to the US Securities and Exchange Commission.
SEC rules require a shareholder that acquires, with an activist intent, more than 5% of a company’s shares to file a 13D form that discloses the investor’s identity and the investor’s purpose in acquiring those shares.
Portfolio positions are constantly reviewed using a proprietary qualitative methodology that examines the effectiveness of activist investors’ achievement of their stated objectives and the creation of positive shareholder returns.
The fund comes with an expense ratio of 0.75%.
The ‘AlphaFactor Tactical Focused’ ETF, meanwhile, utilizes a proprietary quantitative factor-based model to select stocks based on characteristics such as net share count reduction, free cash flow growth, dividend yield, volatility, and leverage.
Eligible securities must have a market capitalization above $1bn with final selection based on market characteristics such as liquidity and market capitalization.
In addition, the strategy employs a multi-factor tactical risk-management overlay, based on technical indicators, that shifts portfolio assets to money market instruments during periods of heightened market risk.
The ETF comes with an expense ratio of 0.99%.
LSAT is the second ‘AlphaFactor’ ETF from LeaderShares, joining the $80m LeaderShares AlphaFactor US Core Equity ETF (LSAF US) which comes with an expense ratio of 0.75%. This fund is passively managed and tracks a proprietary index that selects and equally weights the 100 stocks with the highest multi-factor scores. The ETF does not include a tactical risk management overlay.
The fourth product in the LeaderShares lineup is the LeaderShares Equity Skew ETF (SQEW US).