New Active ETF Seeks To Capitalize On 'Market Legends' Picks

Investors have tried to capitalize on the secrets of market legends such as Warren Buffett and Ben Graham for decades. Their prowess at picking value areas of the market or sticking with tried and true fundamentals is a skill that isn’t always easy to replicate.

Fortunately, Validea Capital Management has released a new actively-managed ETF designed to capitalize on the best strategies of these renown investors.

The Validea Market Legends ETF VALX was listed on the NASDAQ exchange on December 10, 2014, and follows a unique approach to its stock selection methodology. VALX analyzes 10 different “guru” models and selects 10 stocks from each strategy that represent the underlying holdings. Some examples of these models include: deep value, earnings growth and quality factors.

The portfolio of 100 stocks is scrutinized on a regular basis (every 28 days) to determine if the analytical scoring system requires a substitution to a better performing company. This rigid selection process is designed to provide long-term growth and outperformance over a benchmark index such as the S&P 500.

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According to the press release, "Validea Capital believes that the best way to outperform the market is to learn from the select group of legendary investors who have done so historically," said John P. Reese, CEO of Validea Capital and co-portfolio manager of the fund. "For over ten years, Validea Capital has been running fundamental-based models using these legendary strategies and now the Validea Market Legends ETF provides an easy way for individual and professional investors to gain access to our unique stock selection approach.”

The VALX portfolio is expected to exhibit a small-to-mid cap value tilt, but can can seek out other areas of the market when conditions dictate. The active designation gives the managers flexibility to incorporate stop losses for many of the holdings as well.

This new ETF will go head to head with the Direxion iBillionaire Index ETF IBLN and Global X Guru Index ETF GURU, which both provide a unique spin on tracking wealthy investor portfolios. IBLN tracks a group of billionaire investors based on their public disclosure filings, while GURU combs through various hedge funds’ favorite holdings.

It will be interesting to see some of the best ideas this new ETF can incorporate in 2015 and beyond.