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Research Affiliates Deletions ETF

Fund Overview

The Research Affiliates Deletions ETF seeks to benefit from long-term price reversal of companies dropped from market capitalization weighted indices.

Market capitalization-weighted indices all follow a common pattern. Stocks are added when they are valuable and beloved enough to get on the radar of the investment community. The stocks that are conversely deleted from these indices are almost always unloved, have fallen out of favor, and are no longer valuable enough to be deemed important.

The Research Affiliates Deletions ETF purchases stocks that fall out of traditional large/mid capitalization weight indices. Our research shows that these stocks, typically small cap value stocks, outperform the market in the years following their removal[1]. The index is equally weighted and rebalanced annually.

Methodology

Thoughtfully designed to deliver for investors.

  • Buys recent index deletions
    The ETF anchors the selection of companies to fundamental measures of firm size, namely, adjusted sales, adjusted cash flow, dividends plus buybacks, and book value plus intangibles. Traditional market capitalization indices buy high, adding companies to their index that have outperformed the market in the year prior to being added. The Research Affiliates Deletions Index buys low, adding deleted companies that historically outperform the index additions that replaced them in the twelve months following being deleted.
  • Takes advantage of potential long-term stock reversal
    Deleted companies are unpopular, unloved companies trading at deep discounts. They have the potential for outperformance through long-term mean reversion.
  • Provides exposure to small cap value stocks
    Recent index deletions are typically small cap value stocks. This approach provides a thoughtful way to gain small cap value exposure by adding recent index deletions that historically have had attractive valuations relative to the market.

 

Fund Objective

The Research Affiliates Deletions ETF (the “Fund”) seeks to track the total return performance, before fees and expenses, of the Research Affiliates Deletions Index (the “Index”).

 

Fund Details

* The Fund’s investment adviser has contractually agreed to reduce its management fee from 0.39% to 0.19% of the Fund’s average daily net assets. The Fee Waiver Agreement does not provide for recoupment of waived management fees and it will remain in place until October 31, 2026 unless terminated sooner by the Trustees.

Fund Documents

NAV and Market Price

NAV is the sum of all assets less any liabilities, divided by the number of shares outstanding.

Historical Performance

Month-End Performance

Quarter-End Performance

The performance data quoted represents past performance and there is no guarantee of future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The Fund is new and therefore does not have a performance history for a full calendar year as most recent quarter end.

Market Price Return is calculated using the price at which investors buy and sell ETF shares in the market. The market returns in the table are based on the midpoint of the bid/ask spread at 4 p.m. EST and do not represent the returns you would have received if you traded shares at other times.

NAV is the sum of all assets less any liabilities, divided by the number of shares outstanding

Historical Premium / Discount

The Premium/Discount shows the difference between the daily market price of the Fund ‘s shares and the Fund’s net asset value (“NAV”). The table shows the premium or discount of the mid-point price as a percentage of the NAV as well as the number of trading days the Fund traded within the given premium/discount range. The amount that the fund’s Market Price is above the reported NAV is called the premium. The amount that the fund’s Market Price is below the reported NAV is called the discount.

Fund Distributions

Fund Holdings

Fund holdings and allocations are subject to change at any time and should not be considered a recommendation to buy or sell any security.