February was the first full month for the Motley Fool 100
ETF, and we're pleased with performance so far. Of
course, one month is far too short a time to measure one’s performance, but
it’s a start. We'll have standardized performance next month, after the quarter ending March 31.
Unlike the other products at Motley Fool Asset Management,
the Motley Fool 100 ETF is a passive investment. Simply put, that means that as
your portfolio manager, I am trying my best to have the ETF achieve similar returns to the Motley Fool 100 Index* itself. Contrast this with
actively managed funds, for
example, where the portfolio manager is trying very hard to beat the benchmark.
However, the Motley Fool 100 Index is
not exactly a typical benchmark; it was created by our sister company with the
belief that a portfolio of high-quality companies with smart management teams
can beat the broad market, as measured by the S&P 500, over the long run.
Of the companies in the Fool 100 Index, Twitter had the best month with a 23% return. Skyworks Solutions (+12%) and CME Group (+8%) also did quite well. On the other hand, 13 companies declined at least 10% for the month, led by Expedia (-18%), Biogen (-17%), and Comcast (-15%). But since the index is market cap-weighted, a few holdings had a much larger impact on the ETF’s overall return. Apple is nearly 9% of the index, so its 6.4% return was extremely helpful against the broad market’s decline. Amazon.com, making up 7% of the index, also helped with its 4.2% gain during the month. Meanwhile, Alphabet’s modest 6% decline had the greatest impact, since it accounts for 7.6% of the index.
The index contains 100 companies and is
rebalanced quarterly. Since the ETF is seeking to match this performance, we
remained invested in the same companies during the month. One company changed
its name -- Priceline Group is now Booking Holdings -- but the investments
otherwise stayed the same. The index has its next rebalance at the end of
March, after which the 100 companies held in the fund may be somewhat
different. You can always see the full
list of holdings in the ETF, updated daily, at www.fool100etf.com/holdings.
Note: Opinions expressed are subject to change at any time, are not guaranteed and should not be considered investment advice.
*The Motley Fool 100 index is a market-cap weighted index that measures the performance of The Motley Fool’s 100 largest active buy recommendations or highest-rated stocks in Fool IQ, the company's analyst opinion database. Every company included in the Index is incorporated and listed in the U.S. You cannot invest directly in an index.
*Holdings are subject to change. Holdings and percent of assets are based on security assets only, not including cash or receiveables (unpaid interest and dividends).
Please consider the charges, risks, expenses, and investment objectives carefully before you invest. Please see the prospectuses for the Motley Fool 100 Index ETF (the “Fund”) containing this and other information. Read it carefully before you invest or send money.
The investment advisor for the Fund is Motley Fool Asset Management, LLC (“MFAM”). Shares of the Fund are distributed by Quasar Distributors, LLC, a registered broker-dealer not affiliated with The Motley Fool.
The net asset value (“NAV”) of the Fund’s shares is determined as of the close of regular trading on the NYSE (generally 4:00 p.m. Eastern time) each day the NYSE is open. Share are purchased and sold in secondary market transactions at negotiated market prices rather than at NAV. Shares of the Fund may be bought and sold throughout the day on the exchange through a brokerage account. However, shares are not individually redeemable, and may only be redeemed directly from the Fund by Authorized Participants in very large creation/redemption units. Shares may trade at, above or below NAV. Brokerage commissions will reduce returns.
Investing involves risk, including possible loss of principal. To the extent the Fund invests more heavily in particular sectors of the economy (e.g., technology), its performance will be especially sensitive to developments that significantly affect those sectors. Similarly, the Fund is non-diversified, which means that it may invest a high percentage of its assets in a limited number of securities and, as a result, gains or losses on a single stock may have a greater impact on the Fund.
In addition to normal risks associated with investing in equity securities, investments in the Fund are subject to those risks specific to ETFs. Unlike other funds managed by MFAM, the Fund is not actively managed and we do not attempt to take defensive positions in any market conditions, including adverse markets. Likewise, we would not sell shares due to current or projected underperformance of a security, industry, or sector, unless that security is removed from the Index or the selling of shares of that security is otherwise required upon a reconstitution of the Index. As with all index funds, the performance of the Fund and its Index may differ from each other for a variety of reasons, including the operating expenses and portfolio transaction costs not incurred by the Index. In addition, the Fund may not be fully invested in the securities of the Index at all times, or may hold securities not included in the Index. Finally, Fund shares may trade at a material discount to NAV, and this risk is heightened in times of market volatility or periods of steep market declines.
For these and other reasons, there is no guarantee the Fund will achieve its stated objective.
MFAM is a wholly owned subsidiary of The Motley Fool Holdings, Inc., which is a multimedia financial-services holding company. MFAM is a separate entity, and all investment decisions are made independently by the asset managers at MFAM. Neither of TMF co-founders, Tom Gardner and David Gardner, nor any other TMF analyst is involved in the investment decision-making or daily operations of MFAM.
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