GBGR Post Rebalance Review Q2 2022

by Justin Lowry, President & CIO, Global Beta Advisors, LLC

The Global Beta Rising Stars ETF (“GBGR”), in accordance with our FactSet Rising Stars Index, rebalanced at the close of 06/17/22.

  • GBGR rebalances quarterly to align itself with technology companies that are demonstrating the greatest advance in their industries, while avoiding companies with extreme valuations.
  • GBGR’s quarterly rebalance helps the portfolio reset its portfolio characteristics, such that we rotate into names with better valuations that are demonstrating compelling and strong growth trends.
  • Through our customization process, we want to find growth opportunities before they get too expensive.
  • In this rising interest rate environment, we believe stocks with high valuations are going to continue to see elevated volatility. However, we believe there are still opportunities for investors to find growth companies with more reasonable valuations and GBGR attempts to identify those opportunities.
Tech Stocks

Below you will find notable securities that were removed from the index during the rebalance, given their growth trends and valuations:

Notable Deletions

Ticker Company Name Former Weight Current Price-to-Sales Ratio Year-Over-Year Sales Growth
TWTR Twitter, Inc. 2.18% 6.08 32.90%
AMWL American Well Corporation Class A 1.41% 4.39 4.12%
CVLT CommVault Systems, Inc. 1.10% 3.84 6.37%
CALX Calix, Inc. 1.01% 3.38 16.73%
JMIA Jumia Technologies AG Sponsored ADR 0.70% 3.34 20.42%
ZUO Zuora, Inc. Class A 0.55% 3.18 15.31%
BLKB Blackbaud, Inc. 0.79% 3.01 6.26%
MITK Mitek Systems, Inc. 0.95% 3.11 19.35%
NTCT NetScout Systems, Inc. 1.60% 2.98 2.92%
BE Bloom Energy Corporation Class A 0.59% 3.01 17.76%

Former weight as of 06/17/22. Current price-to-sales ratio and year-over-year sales growth as of 06/17/22. Year-over-year sales growth based on the company’s most recently reported 12-month trialing revenue divided by the company’s 12-month trailing revenue from exactly one year prior. Price-to-sales takes the company’s current market capitalization and divides by the company’s most recently reported 12-month trailing revenue.

Below you will find notable securities that were added to the index during the rebalance, given their current market share trends and valuations:

Notable Additions

Ticker Company Name New Weight Current Price-to-Sales Ratio Year-Over-Year Sales Growth
OPEN Opendoor Technologies Inc 1.26% 0.26 273.08%
COMP Compass Inc Class A 0.67% 0.25 59.06%
VVNT Vivint Smart Home, Inc. Class A 0.95% 0.57 17.55%
CPNG Coupang, Inc. Class A 1.19% 1.06 40.37%
EGHT 8×8, Inc. 0.66% 1.02 19.87%
CNXC Concentrix Corporation 0.76% 1.32 18.13%
FND Floor & Decor Holdings, Inc. Class A 0.75% 1.96 38.68%
UBER Uber Technologies, Inc. 0.75% 2.01 103.89%
ZIP ZipRecruiter, Inc. Class A 1.46% 2.41 95.95%
ACVA ACV Auctions, Inc. Class A 1.12% 2.87 66.84%

New weight as of 06/17/22. Current price-to-sales ratio and year-over-year sales growth as of 06/17/22. Year-over-year sales growth based on the company’s most recently reported 12-month trialing revenue divided by the company’s 12-month trailing revenue from exactly one year prior. Price-to-sales takes the company’s current market capitalization and divides by the company’s most recently reported 12-month trailing revenue.

Turnover Recap

Current Price-to-Sales Ratio Year-Over-Year Growth
Additions 1.37 73.34%
Deletions 3.63 14.21%

Current price-to-sales ratio and year-over-year sales growth as of 06/17/22. Year-over-year sales growth based on the company’s most recently reported 12-month trialing revenue dividend by the company’s 12-month trailing revenue from exactly one year prior. Price-to-sales takes the company’s current market capitalization and divides by the company’s most recently reported 12-month trailing revenue.

The Turnover Recap table is a summary of the characteristics for the securities that were sold from the index versus those that were added. By virtue of our index methodology, the index seeks to identify stocks showing recent growth trends but at appropriate relative valuations.

Please visit gbgr.globalbetaetf.com to view the index’s new holdings and find out more about the index and its investment objective!

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.

The fund’s primary risks:

Mid-Capitalization Securities Risk
The securities of mid-capitalization companies are often more volatile and less liquid than the stocks of larger companies and may be more affected than other types of securities during market downturns. Compared to larger companies, mid-capitalization companies may have a shorter history of operations, and may have limited product lines, markets or financial resources.

Concentration Risk
To the extent that the Target Index is concentrated in a particular industry, group of industries or sector, the Fund is also expected to be concentrated in that industry, group of industries or sector, which may subject the Fund to a greater loss as a result of adverse economic, business or other developments affecting that industry, group of industries or sector.

Dividend-Paying Securities Risk
The Fund’s emphasis on dividend-paying stocks involves the risk that such stocks may fall out of favor with investors and underperform the market. Also, a company may reduce or eliminate its dividend after the Fund’s purchase of such a company’s securities.

Large Capitalization Securities Risk
The securities of large market capitalization companies may underperform other segments of the market because such companies may be less responsive to competitive challenges and opportunities and may be unable to attain high growth rates during periods of economic expansion.

Distributor: Compass Distributors, LLC

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