etf OUSA

[Ready-4-ER-at-14]

Kevin O Leary from the tv show Shark tank (on ABC) apparently had created some ETF's one of which is OUSA. The chart beat my mututal funds soundly but did not quite beat the index although close re the spy.

From what I read somewhere, he wanted a fund of good companies that would not get too concentrated into just a couple of big winners to allow a generational trust funding vehicle. It does some rebalancing or new purchases with specific company criteria (filters).
He says "because two-thirds of the stocks inside the S&P 500 I don't want to own" per an article by Sumit Roy July 5, 2017.
I'm consider this for some pass through to a different generation play eventually. If I buy it would be early in 2018.

I'm not too savvy on etfs even though I have a few but I treat them just like stocks re buying with a trend. (spell check wanted to change etfs to elf's ho ho ho tis the season.)

Any thoughts about the fund itself. I have some money still in mutual funds that I want to go to index funds/etfs and was considering about 20% of it going into this.

It sounds like they sacrifice some upside for downside protection.

 

[Sunset]

This comparison of returns, is it based on before or after the expense ratio OUSA charges of: 0.48% ?

That is a pretty steep charge. But I guess Kevin never does anything for free

 

[OldShooter]

Creating a portfolio that backtests well is a trivial and nearly useless exercise IMO.

Chasing hot managers is, per the S&P Manager Persistence Report Card, also a waste of time.

So this, or any other stock-picking fund, is not something I'd be interested in.

 

[Ready-4-ER-at-14]

This comparison of returns, is it based on before or after the expense ratio OUSA charges of: 0.48% ?

That is a pretty steep charge. But I guess Kevin never does anything for free

I think this was a raw price chart. Probably they take the fees from the dividends or take partial shares to make the payments. I just put both symbols into yahoo financial and plotted them. As I said b4 compared to the mutual fund return (which was good overall, just not stellar as the index and the OUSA was over last year or so).


Regarding beating an index like sp500 being an exercise in futility:

I suppose, however isn't this product simply creating a new index? I don't understand exactly how 5p500 companies are picked as to parameters needed, I do know some are taken out of index and others added.. so not like any index is fixed in stone.

 

[dirt_dobber]

Kevin O'Leary purchased a lot of GE for $20 in Oct. and stated he would buy more if it went under $20 - I wonder if he followed through with that idea. GE is fading fast.

 

[OldShooter]

... Regarding beating an index like sp500 being an exercise in futility:

I suppose, however isn't this product simply creating a new index? I don't understand exactly how 5p500 companies are picked as to parameters needed, I do know some are taken out of index and others added.. so not like any index is fixed in stone.

This is actually quite a complex question.

The original William Sharpe paper "The Arithmetic of Active Management" showed that the average of all participants in a market is the market average. Hence, the average performance of all active managers must underperform the market average by the amount of their costs. Further, the active managers will underperformpassive managers by the difference between their costs and the lower costs of the passive managers. So, in that context, resistance is futile.

What Sharpe did not explicitly state is that for his arithmetic to be exactly correct, the universe of stocks in the market average must be exactly the same as the universe of stocks that the participants are buying.

In the real world, of course, this exact match will never happen. The S&P SPIVA reports tell us, though, that an approximate match is good enough -- the active managers still underperform an approximately matching average (aka index)

So, to the point, comparing a fund or a sector to an index is only valid to the extent that the index accurately represents the fund or sector. The hucksters love when we forget this, because it lets them (for example) tout the performance of their weird little funds versus a totally irrelevant index like the S&P.