TTAC, offered by Free Cash Flow Advisors via the TrimTabs Asset Management brand, actively invests according to a fundamentals-driven process that chooses 150 stocks based on free cash flow strength.
By emphasizing free cash flow profitability and growth as well as shrinking leverage and decreasing shares outstanding, the quality growth option ETF has met its goal to outperform the Russell 3000 Index of late, returning 9% more than the index over one year.
TTAC went underweight for big tech names like GOOGL and META at a time when the firms were rallying. From July 31 last year to October 31 this year, the Russell 3000 TR Index held a 3% average weight for AMZN, while TTAC held no AMZN shares.
TTAC weighted META at 0.4% compared to 1.3% for the index, and Microsoft (MSFT) at just 3.3% compared to 5% for the Russell 3000 TR Index in that period. The quality growth ETF saw similar weighting gaps between its holdings and those of the S&P 500 TR Index as well, holding a 5.75% weight for Apple Inc. (AAPL) compared to the S&P 500 TR Index’s 6.7% weight.
The ETF’s assessment of each firm’s free cash flow profitability led TTAC to outperform, during that five-quarter period, TTAC’s cumulative active return against the Russell 3000 TR Index was 7.4%, with 24.5% of the excess return attributable to the underweight tech ETF’s decision to underweight the FAAMGT stocks.
TTAC’s cumulative active return versus the S&P 500 TR Index was 5.3%, with an even larger amount due to weighting the mega-cap tech firms, a full 47.5% of the excess return.
Investors looking for exposure to large-cap growth equity opportunities, but concerned by significant market uncertainty driven by rising rates, geopolitics, and the prospect of a recession may want to keep TTAC’s fundamental analysis, free cash flow analysis approach in mind. While trends come and go, consider trusting the fundamentals with TTAC.
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