"The proprietary algorithm is the secret sauce that helps make the whole thing tick, helping us implement the Fund's active methodology," said Ted Theodore, Portfolio Manager at TrimTabs Asset Management.
TTAC is primarily focused on generating long-term gains that exceed those of the Russell 3000 Index. It does so by selecting approximately 100 companies that are both generating free cash flow and reducing their share count without the use of leverage.
"Free cash flow is the gold standard when it comes to evaluating a company," Biderman added, "which is why it's integral to TTAC's methodology." Free cash flow is a particularly powerful indicator of a company's financial health, enabling closer scrutiny of underlying corporate fundamentals, and making it easier to identify quality companies with growing cash reserves. While managements have enormous discretion in how they report sales, earnings, assets, and liabilities, free cash flow is much less likely to be subject to the same financial gimmickry.
Another pillar of TTAC's investment methodology is a focus on share reductions, also known as "float shrink." Companies execute share reductions by lowering the amount of shares outstanding, most commonly through stock buybacks, though this can also be accomplished with other corporate actions. This can prove advantageous for investors holding the stock in question, as they end up holding a "larger piece of the pie." TrimTabs takes an extra step by ensuring that companies executing buybacks are only doing so with free cash flow, not through additional leverage.
The Fund's expense ratio will be 0.59%, amongst the lowest management fees available for an actively-managed ETF. This is a dramatic reduction from the 0.99% fee that TrimTabs was required to charge under AdvisorShares. As an actively managed ETF, TTAC offers investors the potential to achieve "alpha," while maintaining low fees.
About TrimTabs Asset Management
TrimTabs Asset Management was founded in 2005 with the belief that investors should be able to access alpha-oriented strategies that aim to outperform the broad market without paying high management fees. TrimTabs investment products are based on 25 years of TrimTabs Investment research. TTAM is under the leadership of founder and CEO, Charles Biderman, who is interviewed regularly on CNBC, Bloomberg TV, Barron's, The Wall Street Journal, and Forbes. He holds a B.A. from Brooklyn College, and an M.B.A. from Harvard Business School. TTAM has a veteran staff averaging 35 years of experience in portfolio management, marketing, trading, compliance and operations.
The fund's investment objectives, risks, charges and expenses must be considered carefully before investing. The prospectus and summary prospectus contain this and other important information about the investment company, and it may be obtained by calling 800-617-0004 or by visiting trimtabsfunds.com. Read it carefully before investing.
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Investments in the fund include risks associated with small-and mid-cap securities which involve limited liquidity and greater volatility than large-cap securities.
References to other funds should not be interpreted as an offer of these securities. Float Shrink represents the percent change in shares outstanding. This is an average of all holdings in the portfolio as of the date shown. Free Cash Flow Yield is the free cash flow per share divided by the price of the stock. This is an average of all holdings in the portfolio as of the date shown. Alpha is a measure of performance on a risk-adjusted basis.
The Trim Tabs Float Shrink ETF is distributed by Quasar Distributors, LLC.
The Russell 3000® Index measures the performance of the 3,000 largest publicly traded U.S. companies, based on market capitalization. The Index measures the performance of approximately 98% of the total market capitalization of the publicly traded U.S. equity market. It is not possible to invest directly in an index
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