Buybacks Meet Spin-Offs and Value Stocks In This New ETF

There are plenty of exchange traded funds on the market today offering investors exposure to the value factor. Judging by the size of some of these funds, it is fair to say advisors and investors like the idea of dedicated value factor exposure.

There are also some ETFs that focus on share buybacks. And again, some of these funds are successful. There are even some ETFs that are dedicated to spin-offs and at least one of those funds is popular among investors. http://www.benzinga.com/analyst-ratings/analyst-color/15/12/6076841/next-year-could-be-interesting-for-spin-off-etfs

Well, how about marrying buybacks, spin-offs and the value factor under the umbrella of one ETF? The Dhandho Junoon ETF JUNE, which debuted on Wednesday, does that. The Dhandho Junoon ETF follows the Dhandho Junoon Index, which “utilizes a proprietary, rules-based methodology to select approximately 100 U.S. equity securities, master limited partnerships (“MLPs”) and American depositary receipts listed on the NYSE, NYSE Arca and the NASDAQ Stock Market from three categories of issuers: Share Buybacks, Select Value Manager Holdings, and Spin-Offs,” according to a statement issued by California-based Junoon. 

JUNE's share buyback bucket accounts for the largest percentage of the new ETF. The fund looks for companies that are aggressive and consistent buyers of their own shares because those types of companies usually generate ample free cash.

JUNE's value bucket is next.

“To qualify for the Select Value Manager Holdings category, issuers must have been held by one of 22 selected value hedge funds during the previous quarter, as reported on their Form 13F filings,” according to the issuer.

JUNE's value bucket gives investors exposure to stocks held by famous investors such as Warren Buffett, Bill Ackman and Carl Icahn, among others. The new ETF's spin-off bucket is the smallest percentage of the fund. JUNE could spin-offs that are several years removed from being separated from the parent company.

JUNE is top heavy as the new ETF devotes over 45 percent of its combined weight to AutoZone Inc. AZO, Anthem Inc. ANTM and Dow component Travelers Cos. TRV.