Exponential ETFs targets high brand value firms with new fund

Jun 13th, 2017 | By | Category: Equities

Exponential ETFs, a wholly owned platform of Michigan-based boutique asset manager ACSI Funds, has launched the Brand Value ETF (NYSE Arca: BVAL).

Phil Bak, CEO, ACSI Funds.

Phil Bak, CEO, ACSI Funds.

The fund tracks the BrandTransact50 Index, targeting exposure to 50 US-listed companies that demonstrate a price discrepancy between their share price and unrealized overall brand value. Created by Brandometry, a provider of research into brand value, the index uses a rules-based methodology to identify companies with high growth potential and positive brand resonance.

Phil Bak, ACSI Funds CEO, commented: “Quantifying intangible assets is the next frontier in security valuation. We selected Brandometry as our inaugural partner because they have the expertise and ability to deliver on the thesis that brands have value that is not yet being realized in traditional portfolios. We created Exponential ETFs to give innovative asset managers access to the world class ETF product management team to bring their products to market thoughtfully and efficiently, which is exemplified in our partnership with Brandometry.”

The parent index of the BrandTransact50 Index is the Wilshire 5000, indicating that the fund’s composition may be derived from the small-, mid- or large-cap universes of the US equity market. That being said, the fund is primarily large-cap in nature (71%), followed by mid-cap (24%), with a tilt to the consumer discrepancy sector (48%). Financials (17%), information technology (17%) and industrials (11%) make up the next largest sector exposures. (Data as of 1 June 2017)

The BrandTransact50 Index is underpinned by brand performance data from Tenet Partners, a co-developer of the index. Driven by a survey of approximately 10,000 participants from the investment and business communities, end users and potential consumers, on perceptions about various companies’ brands, the index selects and equally-weights the 50 companies with the highest overall ‘brandpower-to-market-capitalization’ scores. Eligible companies must have at least two years’ worth of brand scores to be considered for index inclusion. Reconstitution and rebalancing occur on an annual basis.

“Brand value is the reflection of everything one knows or believes they know about a company,” says Larry Medin, Brandometry’s founder and CEO. “The key is knowing when to own brands that are undervalued and that’s what the Brand Value ETF strives to deliver for investors.”

According to Exponential ETFs, the fund generally has value-based attributions, but can also act like a growth portfolio, thereby acting as a diversified core holding in an investor’s total portfolio.

BVAL has a total expense ratio (TER) of 0.65%.

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