Zacks finds new investors with ETF launch

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Brian Mulberry, Zacks

USD15 billion Zacks Investment Management launched its first ETF last year and Brian Mulberry, Client Portfolio Manager at the firm, explains that the firm was seeking to support a new and different group of clients.

“We had a small exposure to some retail clients and part of what we had been hearing from our adviser community is that they needed a way to access our management without having to commit to the size of investment needed for a separately managed account,” Mulberry says.

 

The firm put together a structure that made sense with a customised tilt that clients had asked for. “We wanted to put our flavour at Zacks to individual client needs,” he says.

 

The Zacks Earnings Consistent Portfolio ETF (ZECP) represents a portfolio of companies that exhibit a track record of moving through recessionary periods with little to minimal impact on aggregate earnings growth relative to the overall equity market.

 

 The fund’s portfolio is composed of 50-120 US exchange-listed companies with the highest stability in their historic and forecasted earnings per share (“EPS”). The quantitative screens are combined with the qualitative judgment of the portfolio manager based on an analysis of financial statement filing consistency, profitability, earnings stability in recessionary periods, valuation, and improving fundamentals.

 

Len Zacks launched Zacks Investment Research in 1978 and through his work at Zacks Investment Research, he uncovered a connection between earnings estimates revisions and rising stock prices, which served as the foundation for Zacks Investment Management. Zacks Investment Management, a subsidiary of Zacks Investment Research, was founded in 1992 and utilises Zacks’ in-depth research to develop data-driven investment strategies that are designed to minimise risk and improve returns over time.

 

The ETF has raised USD50 million since launch and, Mulberry says, has been well received. “We have loyal customers, and it was also a way to introduce ourselves to part of the market we didn’t have exposure to before. We have met in the middle with our different structure which is more inviting and to connect with a whole new audience.”

 

The ETF was launched into a more volatile year than has been seen over recent times but has outperformed the market. The core strategy, based on earnings as the most predictive factor in an investment model, has achieved 13 per cent per year gross of fees since 1992.

 

There are no plans to launch new ETFs at the moment. “We are always in discussions, and we are being sensitive to what the demand is,” Mulberry says. “We don’t have any more specific products, but we can tweak and add a bit more customisation to our models to give more or less exposure to various sectors. We can be very responsive.”

 

 

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Beverly Chandler
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