RAFI Indices Announces First ETF: Research Affiliates Deletions ETF (NIXT)
RAFI Indices, , a subsidiary of Research Affiliates, , has launched its first ETF, the Research Affiliates Deletions ETF (NIXT). This groundbreaking ETF tracks the Research Affiliates Deletions Index, designed to capitalize on the long-term price reversal of companies removed from market capitalization weighted indices. NIXT will begin trading on September 10th, 2024.
The strategy selects securities that drop out of the top 500 or top 1000 U.S. companies by market capitalization and holds them for 5 years in an equal-weight portfolio, rebalancing annually. It uses a 10% banding to reduce turnover. The NIXT strategy may be suitable for investors seeking small cap value exposure and aims to provide structural, uncorrelated alpha through a simple, rules-based index format.
RAFI Indices, una filiale di Research Affiliates, ha lanciato il suo primo ETF, il Research Affiliates Deletions ETF (NIXT). Questo ETF innovativo segue l'Research Affiliates Deletions Index, progettato per sfruttare il rialzo di prezzo a lungo termine delle aziende che sono state escluse dagli indici ponderati per capitalizzazione di mercato. NIXT inizierà a essere scambiato il 10 settembre 2024.
La strategia seleziona titoli che escono dalle prime 500 o prime 1000 aziende statunitensi per capitalizzazione di mercato e li detiene per 5 anni in un portafoglio a peso uguale, riequilibrando annualmente. Usa un intervallo del 10% per ridurre il turnover. La strategia NIXT potrebbe essere adatta per gli investitori in cerca di esposizione ai titoli a piccola capitalizzazione e mira a fornire un alpha strutturale non correlato attraverso un semplice formato di indice basato su regole.
RAFI Indices, una filial de Research Affiliates, ha lanzado su primer ETF, el Research Affiliates Deletions ETF (NIXT). Este ETF innovador sigue el Research Affiliates Deletions Index, diseñado para capitalizar la reversión de precios a largo plazo de las empresas que son eliminadas de los índices ponderados por capitalización de mercado. NIXT comenzará a cotizar el 10 de septiembre de 2024.
La estrategia selecciona valores que caen fuera de las 500 o 1000 principales empresas de EE. UU. por capitalización de mercado y los mantiene durante 5 años en una cartera de igual ponderación, reequilibrando anualmente. Utiliza un margen del 10% para reducir la rotación. La estrategia NIXT puede ser adecuada para los inversores que buscan exposición a valores de pequeña capitalización y tiene como objetivo proporcionar alpha estructural no correlacionado a través de un formato de índice simple basado en reglas.
RAFI Indices는 Research Affiliates의 자회사로, 첫 번째 ETF인 Research Affiliates Deletions ETF (NIXT)를 출시했습니다. 이 혁신적인 ETF는 시장 시가총액 가중 지수에서 제외된 기업의 장기 가격 반전을 활용하도록 설계된 Research Affiliates Deletions Index를 추적합니다. NIXT는 2024년 9월 10일부터 거래를 시작합니다.
이 전략은 시가총액 기준으로 미국 상위 500개 또는 1000개 기업에서 제외된 증권을 선택하고, 이를 동등 가중 포트폴리오로 5년 동안 보유한 후 매년 리밸런싱합니다. 10% 밴드를 사용하여 회전율을 줄입니다. NIXT 전략은 소형주 가치 노출을 원하는 투자자에게 적합할 수 있으며, 간단한 규칙 기반 지수 형식을 통해 구조적이며 비상관적인 알파를 제공하는 것을 목표로 합니다.
RAFI Indices, une filiale de Research Affiliates, a lancé son premier ETF, le Research Affiliates Deletions ETF (NIXT). Cet ETF révolutionnaire suit l'Research Affiliates Deletions Index, conçu pour tirer parti de la réversion à long terme des prix des entreprises retirées des indices pondérés par la capitalisation boursière. NIXT commencera à être échangé le 10 septembre 2024.
La stratégie sélectionne des titres qui sortent des 500 ou 1000 plus grandes entreprises américaines par capitalisation boursière et les conserve pendant 5 ans dans un portefeuille à pondération égale, avec un rééquilibrage annuel. Elle utilise une bande de 10% pour réduire le turnover. La stratégie NIXT pourrait convenir aux investisseurs recherchant une exposition aux valeurs de petite capitalisation et vise à fournir un alpha structurel non corrélé grâce à un format d'indice simple basé sur des règles.
RAFI Indices, eine Tochtergesellschaft von Research Affiliates, hat ihren ersten ETF, den Research Affiliates Deletions ETF (NIXT), eingeführt. Dieser bahnbrechende ETF verfolgt den Research Affiliates Deletions Index, der darauf ausgelegt ist, die langfristige Preisumkehr von Unternehmen zu nutzen, die aus kapitalisierungsgewichteten Indizes ausgeschlossen wurden. NIXT wird am 10. September 2024 mit dem Handel beginnen.
Die Strategie wählt Wertpapiere aus, die aus den Top 500 oder Top 1000 US-Unternehmen nach Marktkapitalisierung ausscheiden und hält diese 5 Jahre lang in einem gleichgewichteten Portfolio, wobei jährlich ein Rebalancing durchgeführt wird. Es wird ein 10%iger Band verwendet, um die Umschlagshäufigkeit zu reduzieren. Die NIXT-Strategie könnte für Investoren geeignet sein, die eine Exposition gegenüber Small-Cap-Werten suchen, und zielt darauf ab, durch ein einfaches, regelbasiertes Indexformat strukturelles, unkorreliertes Alpha zu liefern.
- Launch of RAFI Indices' first ETF, potentially expanding their product offerings and revenue streams
- Unique strategy targeting companies deleted from major indices, potentially capitalizing on undervalued assets
- Partnership with ETF Architect, for ETF launch, possibly leveraging expertise and resources
- Passive indexing approach, which may appeal to investors seeking lower-cost investment options
- Potential risks associated with investing in out-of-favor or underperforming companies
- track record as RAFI Indices' first ETF, which may concern some investors
- Possible higher volatility due to focus on small cap and value stocks
Insights
The launch of RAFI Indices' first ETF, the Research Affiliates Deletions ETF (NIXT), is an intriguing development in the ETF market. This contrarian small value strategy targets companies removed from large/mid-cap indices, betting on their potential rebound. Historical data suggests these "unloved" companies often outperform their replacements, offering a unique alpha-generating opportunity.
The ETF's passive indexing approach, coupled with a 5-year holding period and annual rebalancing, aims to capitalize on long-term mean reversion. This strategy could provide diversification benefits for investors, as it's likely to have low correlation with traditional market-cap weighted indices. However, investors should be aware that focusing on deleted companies may involve higher risk and potentially lower liquidity.
The NIXT ETF represents an innovative approach to small-cap value investing. By targeting companies deleted from major indices, it taps into a niche market segment often overlooked by mainstream investors. This strategy aligns with the growing trend of factor investing and smart beta strategies in the ETF space.
The fund's launch in September 2024 is well-timed, as investors increasingly seek alternative sources of alpha in a market where traditional strategies may be saturated. The equal-weight portfolio structure and quality screening further enhance its appeal. However, the success of this ETF will largely depend on its ability to attract assets and maintain liquidity, given its focus on potentially out-of-favor stocks.
The Research Affiliates Deletions ETF (NIXT) presents an interesting proposition for portfolio construction. Its focus on companies deleted from major indices could provide exposure to potential turnaround stories and act as a contrarian play in a diversified portfolio. The 5-year holding period aligns well with long-term investment horizons, potentially reducing turnover costs.
However, investors should consider the risk profile of this strategy. Deleted companies may face fundamental challenges and not all will successfully rebound. The equal-weight approach helps mitigate single-stock risk, but the overall portfolio may exhibit higher volatility than broad market indices. This ETF could serve as a satellite holding in a core-satellite portfolio strategy, complementing more traditional equity exposures.
Groundbreaking ETF targets companies deleted from large/mid capitalization weighted indices and poised for potential bounce back performance
“Companies that are deleted from popular market indices are often unloved, have fallen out of favor and are no longer valuable enough to be deemed important. Perhaps somewhat counterintuitive, these companies have historically outperformed the companies that replace them in the years that follow their deletion. In a recent research piece, ‘Nixed: The Upside of Getting Dumped,’ we explore this phenomenon,” said Rob Arnott, Chairman and Founder of Research Affiliates. “RAFI Indices created an index tracking these deleted companies, and this unique strategy is a perfect fit for an ETF, as it provides structural, uncorrelated alpha executed in a simple, rules-based index format.”
The Research Affiliates Deletions Index is a contrarian small value strategy that seeks to take advantage of persistent long-term mean reversion by selecting companies removed from capitalization-weighted
“Our decision in sponsoring this ETF was driven by a desire to make the index deletions strategy as accessible as possible,” said Arnott. “We also feel that the NIXT Index is uniquely complementary to many of our other strategies. Research Affiliates is always looking for new ways to bring our investment ideas to the market, whether through mutual funds, ETFs, insurance products, commingled vehicles, or SMAs.”
The NIXT strategy may be suitable for investors looking to obtain small cap value exposure. Empowered Funds dba ETF Architect, LLC is the Fund Advisor.
For more information on the Research Affiliates Deletions ETF, visit: www.nixtetf.com
About RAFI Indices
RAFI Indices, LLC is an index company founded in 2016 by Research Affiliates. It specializes in constructing, publishing, and licensing indices that reflect a deep, academically rigorous understanding of the fundamental factors driving capital market returns. The company is renowned for its innovative approach, offering over 55 live strategies that cater to a diverse range of investment needs worldwide. Importantly, RAFI Indices operates independently and does not offer investment advice or sell any securities, commodities, or derivative instruments.
Web: www.rafi.com
About Research Affiliates
Research Affiliates is a globally recognized investment advisor established in 2002. Its mission is to challenge conventional wisdom and revolutionize the investment community for the benefit of investors through innovative research and product development. The company offers industry-leading smart beta and enhanced indexing, quantitative active equity, and multi-asset products. Research Affiliates believes that because market prices are not perfectly efficient, systematic investment strategies can provide opportunity for improved investment performance. It partners with some of the world's largest investment managers and offers mutual funds, ETFs, commingled funds, and separately managed accounts. As of June 30, 2024, the firm has over
Web: www.researchaffiliates.com
LinkedIn: @Research-Affiliates
Twitter: @ra_insights
Important Information
Investments involve risk. Principal loss is possible. Redemptions are limited and often commissions are charged on each trade. Unlike mutual funds, ETFs may trade at a premium or discount to their net asset value.
The Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. Click here for the NIXT Prospectus and SAI. A free hardcopy of any prospectus may be obtained by calling +1.215.882.9983. Read carefully before investing.
The Fund is distributed by Quasar Distributors, LLC. The Fund’s investment advisor is Empowered Funds, LLC which is doing business as EA Advisers.
Mid-Capitalization Companies Risk. The securities of mid-capitalization companies may be more vulnerable to adverse issuer, market, political, or economic developments than securities of larger-capitalization companies. The securities of mid-capitalization companies generally trade in lower volumes and are subject to greater and more unpredictable price changes than larger capitalization stocks or the stock market as a whole.
Micro- and Small-Capitalization Companies Risk. Investing in securities of micro- and small- capitalization companies involve greater risk than customarily is associated with investing in larger, more established companies. Micro- and small- capitalization companies often have less predictable earnings, more limited product lines, markets, distribution channels and financial resources, and the management of such companies may be dependent upon one or few people.
Passive Investment Risk. The Fund is not actively managed and the Adviser will not sell shares of an equity security due to current or projected underperformance of a security, industry or sector, unless that security is removed from the Index, sold in connection with a rebalancing of the Index, or sold to comply with the Fund’s investment limitations (for example, to maintain the Fund’s tax status).
New Fund Risk. The Fund is a recently organized management investment company with no operating history. As a result, prospective investors have no track record or history on which to base their investment decision. There can be no assurance that the Fund will grow to or maintain an economically viable size.
Other principal risks of investing in the fund include: Risk of Investing in the
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Tyler Bradford
Hewes Communications, Inc.
+1 (212) 207-9454
hewesteam@hewescomm.com
Source: Research Affiliates, LLC
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