Kevin O'Leary's O'Shares ETFs has filed plans to possibly introduce five new smart beta exchange-traded funds. The new funds will focus on quality growth strategies, according to the SEC filing. The five existing O'Shares ETFs primarily focus on quality dividend strategies. The ETFs O'Shares has filed for are:
- O'Shares U.S. Large Cap Quality Growth ETF
- O'Shares U.S. Small Cap Quality Growth ETF
- O'Shares Internet Giants ETF
- O'Shares Robotics Quality Growth ETF
- O'Shares Artificial Intelligence Quality Growth ETF.
The O'Shares U.S. Large Cap Quality Growth ETF will track the O’Shares U.S. Large Cap Quality Growth Index, according to the filing. That index excludes asset classes such as business development companies, master limited partnerships (MLPs) and real estate investment trusts (REITs). The 'quality' factor combines scores for profitability (return on equity and return on assets), leverage (debt to cash flow from operations) and cash flow yield (historical free cash flow to price). The 'growth' factor combines growth in earnings and revenue,” according to the prospectus. Stocks eligible for inclusion in the benchmark are the 500 largest domestic companies. As for the O'Shares U.S. Small Cap Quality Growth ETF, that will follow the O’Shares U.S. Small Cap Quality Growth Index, which follows a similar methodology to its large-cap counterpart. The selection universe for that index is 2,500 domestic mid- and small-cap equities. O'Shares has a quality dividend small-cap fund in the form of the O’Shares FTSE Russell Small Cap Quality Dividend ETF (NYSE: OUSM). The O'Shares Global Internet Giants ETF will track the O’Shares Global Internet Giants Index, which includes retailers, hardware and software providers, among other companies. That index is cap-weighted and emphasizes the quality factor based on companies' monthly spending of shareholder capital. Meanwhile, the growth factor is defined by revenue growth and the price-to-sales ratio relative to revenue growth, with companies scored on both of those metrics,” according to ETF.com. Unlike other robotics ETFs, which have proven popular with investors, the O'Shares Robotics Quality Growth ETF will focus on factor-based investing like the rest of the O’Shares portfolio, which could differentiate it from the bunch. The same goes for the O’Shares Artificial Intelligence Growth ETF, which will follow a similar methodology, marking a significant departure from existing AI ETFs. The large- and small-cap growth ETFs will have annual fees of 0.48 percent, or $48 on a $10,000 investment, while the Internet giants, robotics and artificial intelligence funds will charge 0.68 percent. The prospectus did not include a launch date for the new O'Shares ETFs or listing exchange, though the existing O'Shares ETFs trade on the New York Stock Exchange. Related Links: A Big Bet On Brazil A Quality Idea For This Market
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