GBDV & GBLO: Importance of Market Valuations

History has seemed to indicate that equity markets can experience valuation bubbles that last for years. It also suggests that these bubbles can end suddenly and violently. After that point, it seems that investors then begin to emphasize the importance of market valuations, a behavior that we have seen last for years. We believe that transition is occurring now. The lynchpin of Global Beta ETFs is their focus on rationale valuations. We believe that discipline has been the catalyst for its strong start to 2022, as illustrated in the below charts.

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Comparison GBDV vs SPYD

12/31/21 to 5/31/22

GBDV v SPYD

Return Cumulative Return Standard Deviation Population Excess Return Cumulative Excess Return Information Ratio R-Squared Tracking Error
Global Beta Smart Income ETF (NAV) 10.37 10.37 2.82 23.02 23.02 5.37 63.58 2.92
SPDR® Portfolio S&P 500 High Div ETF (NAV) 7.58 7.58 2.75 20.23 20.23 5.35 76.48 2.53
S&P 900 (12.66) (12.66) 4.24 0.00 0.00 N/A 100.00 0.00

The performance data quoted represents past performance and is no guarantee of future results. Investment return 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. For the most recent month-end performance, please call (833) 933-2083.

Comparison GBDV vs USMV

12/31/21 to 5/31/22

GBLO vs USMV

Return Cumulative Return Standard Deviation Population Excess Return Cumulative Excess Return Information Ratio R-Squared Tracking Error
Global Beta Low Beta ETF (NAV) 4.62 4.62 2.34 17.37 17.37 4.08 77.26 2.79
iShares MSCI USA Min Vol Factor ETF (NAV) (8.89) (8.89) 4.16 3.87 3.87 1.31 87.03 1.74
S&P 500 (12.76) (12.76) 4.29 0.00 0.00 N/A 100.00 0.00
Fund Name Global Beta Low Beta ETF Global Beta Smart Income ETF SPDR® Portfolio S&P 500® High Dividend ETF iShares MSCI USA Min Vol Factor ETF
Ticker GBLO GBDV SPYD USMV
Index Global Beta Low Beta Factor Index Global Beta Smart Income Index  S&P® 500 High Dividend Index iShares MSCI USA Min Vol Index
Fund Objective GBLO seeks to track the Global Beta Low Beta Factor Index, which selects companies with the lowest beta relative to the S&P 500 and weights them by revenue. Beta is a measure of the relative volatility of a security as compared to the market. The Global Beta Smart Income ETF seeks to track the performance (before fees and expenses) of the Global Beta Smart Income Index. The index is composed of stocks in the S&P 900 index with the highest average 12-month trailing dividend yield over the prior 4 quarters on a diversified basis. The S&P® 500 High Dividend Index is designed to measure the performance of the top 80 high dividend-yielding companies within the S&P 500 ®  Index, based on dividend yield. To determine dividend yield: (i) an indicated dividend is measured by taking the latest dividend paid (excluding special payments) multiplied by the annual frequency of the payment; and (ii) the indicated dividend is then divided by the company’s share price at the date of rebalancing. The iShares MSCI USA Min Vol Factor ETF seeks to track the investment results of an index composed of U.S. equities that, in the aggregate, have lower volatility characteristics relative to the broader U.S. equity market.
Inception Date 7/23/2020 12/27/2019 10/21/2015 10/18/2011
Gross Expense Ratio 0.29% 0.29% 0.07% 0.15%
Net Expense Ratio 0.29% 0.29% 0.07% 0.15%
Principal Risks Fund is subject to the principal investment risks noted below, any of which may adversely affect the Fund’s net asset value (“NAV”), trading price, yield, total return and ability to meet its investment objective. The fund is also subject to the following principal risks that may have an adverse effect on the fund. The market values of the Fund’s investments, and therefore the value of the Fund’s shares, will go up and down, sometimes rapidly or unpredictably. Turbulence in the financial markets and reduced liquidity may negatively affect issuers. In addition, there is a risk that policy changes by the U.S. Government, Federal Reserve and/or other government actors, such as increasing interest rates, could cause increased volatility in financial markets and disruption in the creation/redemption process of the Fund. The Target Index, and thus the Fund, seeks to achieve the specific factor exposures. There can be no assurance that targeting exposure to such factors will enhance the Fund’s performance over time, and targeting exposure to those factors may detract from performance in some market environments. There is no guarantee the Index Provider’s methodology will be successful in creating an index that achieves the specific factor exposures identified above. In addition to the risks of common stocks, low volatility stocks are seen as having a lower risk profile than the overall markets. However, a portfolio comprised of low volatility stocks may not produce investment exposure that has lower variability to changes in such stocks’ price levels. Low volatility stocks are likely to underperform the broader market during periods of rapidly rising stock prices. There is a risk that the present and future volatility of a security will not be the same as it has historically been and thus that the Target Index will not be exposed to less volatile securities. The Fund is classified as “non-diversified” under the 1940 Act, which means that a relatively high percentage of the Fund’s assets may be invested in a limited number of issuers. Fund is subject to the principal investment risks noted below, any of which may adversely affect the Fund’s net asset value (“NAV”), trading price, yield, total return and ability to meet its investment objective. The fund is also subject to the following principal risks that may have an adverse effect on the fund. The market values of the Fund’s investments, and therefore the value of the Fund’s shares, will go up and down, sometimes rapidly or unpredictably. Turbulence in the financial markets and reduced liquidity may negatively affect issuers. In addition, there is a risk that policy changes by the U.S. Government, Federal Reserve and/or other government actors, such as increasing interest rates, could cause increased volatility in financial markets and disruption in the creation/redemption process of the Fund. The Target Index, and thus the Fund, seeks to achieve the specific factor exposures. There can be no assurance that targeting exposure to such factors will enhance the Fund’s performance over time, and targeting exposure to those factors may detract from performance in some market environments. There is no guarantee the Index Provider’s methodology will be successful in creating an index that achieves the specific factor exposures identified above. In addition to the risks of common stocks, low volatility stocks are seen as having a lower risk profile than the overall markets. However, a portfolio comprised of low volatility stocks may not produce investment exposure that has lower variability to changes in such stocks’ price levels. Low volatility stocks are likely to underperform the broader market during periods of rapidly rising stock prices. There is a risk that the present and future volatility of a security will not be the same as it has historically been and thus that the Target Index will not be exposed to less volatile securities. The Fund is classified as “non-diversified” under the 1940 Act, which means that a relatively high percentage of the Fund’s assets may be invested in a limited number of issuers. ETFs trade like stocks, are subject to investment risk, fluctuate in market value and may trade at prices above or below the ETFs net asset value. Brokerage commissions and ETF expenses will reduce returns. Standard & Poor’s®, S&P® and SPDR® are registered trademarks of Standard & Poor’s Financial Services LLC (S&P); Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones); and these trademarks have been licensed for use by S&P Dow Jones Indices LLC (SPDJI) and sublicensed for certain purposes by State Street Corporation. State Street Corporation’s financial products are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and third party licensors and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability in relation thereto, including for any errors, omissions, or interruptions of any index. The fund may experience more than minimum volatility as there is no gaurantee that the underlying index’s strategy of seeking to lower volatility will be successful. Diversification may not protect againist market risk or loss of principal. Shares of ETFs are bought and sold at market price (not NAV) and are not individually redeemed from the fund.
  • For the most recent standardized performance, GBLO click here.  GBDV click here.
  • For a prospectus, more information and standardized performance:  SPYD click here.  USMV click here.

Distributor: Compass Distributors

Global Beta Low Beta Factor Index is composed of stocks in the S&P 500 index with the lowest relative beta to the S&P 500.

S&P 500 Index is a stock market index that measures the stock performance of 500 large companies listed on stock exchanges in the United States.

S&P 900 Index combines the S&P 500® and the S&P MidCap 400® to form an investable benchmark for the mid- to large-cap segment of the U.S. equity market.

Market Value. Market value is usually used to describe how much an asset or company is worth in a financial market.

Beta. Beta is a measure of the relative volatility of a security as compared to the market.

Standardized Performance. Represents the average annual change in the value of a hypothetical investment made at the beginning of the specified time period. It assumes dividends and capital gains distributions are reinvested and includes fund fees, expenses, and sales charges.

Standard Deviation Population. Standard deviation is a measure of the risk that an investment will fluctuate from its expected return. The smaller an investment’s standard deviation, the less volatile it is. The larger the standard deviation, the more dispersed those returns are and thus the riskier the investment is.

Excess Return. Excess return is identified by subtracting the return of one investment from the total return percentage achieved in another investment.

Cumulative Excess Return. Sum of the differences between the expected return on a stock (systematic risk multiplied by the realized market return) and the actual return often used to evaluate the impact of news on a stock price.

Information Ratio. The information ratio, also known as appraisal ratio, measures and compares the active return of an investment compared to a benchmark index relative to the volatility of the active return. It is defined as the active return divided by the tracking error.

R-Squared. R-squared measures the relationship between a portfolio and its benchmark index. It is expressed as a percentage from 1 to 100. R-squared is not a measure of the performance of a portfolio. Rather, it measures the correlation of the portfolio’s returns to the benchmark’s returns.

Tracking Error. A measure of the difference between the return fluctuations of an investment portfolio and the return fluctuations of a chosen benchmark

Before investing you should carefully consider the Fund’s investment objectives, risks, charges, and expenses. This and other information is in the prospectus or summary prospectus. A copy may be obtained by visiting www.globalbetaetfs.com or calling (833) 933-2083. Please read the prospectus or summary prospectus carefully before investing.

Risk Considerations

Investing involves risk including the possible loss of principal. There can be no guarantee that the Fund will achieve its investment objective. The Funds are subject to the principal investment risks noted below, any of which may adversely affect the Fund’s net asset value (“NAV”), trading price, yield, total return and ability to meet its investment objective.

Non-diversified risk. The Fund is considered “non-diversified” and may be more susceptible to a single adverse economic or regulatory occurrence affecting one or more of these issuers, experience increased volatility and be highly invested in certain issuers than a diversified fund.

Factor Risk. The fund’s underlying index, and thus the Fund, seeks to achieve specific factor exposures. There can be no assurance that targeting specific factors will enhance the Fund’s performance over time, and targeting exposure to those factors may detract from performance in some market environments.

Low Beta Risk. Although subject to the risks of common stocks, low volatility stocks are seen as having a lower risk profile than the overall markets. However, a portfolio comprised of low volatility stocks may not produce investment exposure that has lower variability to changes in such stocks’ price levels. Low volatility stocks are likely to underperform the broader market during periods of rapidly rising stock prices.

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