ETF Spotlight: U.S. Large-Cap Equity Strategy

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ETF Spotlight on the Lattice US Equity Strategy ETF (ROUS) , part of an ongoing series.

Assets : $22.6 million

Objective : The Lattice U.S. Equity Strategy ETF tries to reflect the performance of the Lattice Risk-Optimized US Large Cap Equity Strategy Index, which select U.S. companies with favorable combinations of diversified risk premium.

Holdings : Top holdings include Best Buy (BBY) 1.4%, Kroger Co. (KR) 1.4%, Valero Energy Corp (VLO) 1.2%, Centene Corp (CNC) 1.1% and Marathon Petroleum (MPC) 1.1%.

What You Should Know :

  • Lattice Strategies sponsors the ETF.

  • ROUS has a 0.35% expense ratio.

  • The ETF has 312 components and the top ten make up 10.9% of the overall portfolio.

  • Sector allocations include financials 19.2%, information technology 16.1%, consumer discretionary 15.8%, healthcare 12.8%, industrials 10.5%, consumer staples 9.6%, energy 7.8%, utilities 3.9% and telecom services 1.7%.

  • The fund began trading February 25, 2015.

  • ROUS is up 1.9% since its inception.

  • The fund follows a customized, smart-beta index that targets large U.S. stocks but reduces capital concentration in mega-cap multi-national companies.

  • The diminished exposure to large multi-national companies may help ROUS outperform other market-cap-weighted stock funds if the U.S. dollar continues to strengthen since an appreciating USD would weaken profits for companies with overseas revenue streams.

  • Additionally, the ETF emphasizes companies with favorable, diversified risk premia, including valuation, momentum, and quality.

  • Specifically, the index may pick stocks based on the price-to-earnings ratio, price-to-book ratio and standard deviation as a measure of volatility.

  • Component holdings are reconstituted and rebalanced semiannually.

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