New ETF Focuses on Quality, Value, and Momentum

ArrowShares Advisors LLC and Ford Equity research have teamed up to create the Arrow QVM Equity Factor ETF QVM. The new ETF will compliment ArrowShares two existing ETFs, the Arrow Dow Jones Global Yield ETF GYLD which is a more risk adverse passively managed ETF and the Arrow DWA Tactical ETF DWAT that is their more aggressive, actively managed ETF. The strategy behind QVM is based on a tri-factor approach to stock selection the company uses by looking at the quality, value, and momentum of a stock. The idea is to provide the investor with defensive characteristics by reducing volatility and reducing losses during market declines. When the market is advancing the ETF will add stocks that are perceived as undervalued and exhibiting momentum in the hopes of providing growth. The ETF is made up of 50 stocks across 10 sectors with industrials at 27 percent and technology at 19 percent the most heavily weighted. In terms of market cap, large caps make up the largest portion of the ETF with 66 percent followed by mid cap at 26 percent. The top holdings in the portfolio are Kohl's Corp KSS, Western Union Co WU, Delphi Automotive Plc DLPH, and Chemed Corp (NYSEL CHE) all making up between 2.2 and 2.3 percent of the portfolio. The ETF began trading on February 27th at $25.00 per share. Since its inception the ETF has traded with a few pennies of its initial price and has yet to attract a sizable amount of volume. In theory QVM offers investors a strategy that should be able to outperform over the long-term based on the three distinct characteristics: quality, value, and momentum. It will take some time to see how the ETF actually performs in the market versus in "theory" and investors should hold off buying until more data is available.