GraniteShares, an exchange-traded fund (ETF) company, has launched the GraniteShares XOUT US Large Cap ETF (XOUT) in collaboration with XOUT Capital LLC (XOUT Capital).Tracking the XOUT US Large Cap Index, the ETF aims to exclude US large cap companies most likely to suffer from technological disruption over the long term.
XOUT’s methodology counters traditional investment strategies. Rather than trying to pick a select few winners, XOUT flips the investment paradigm by seeking to avoid losers that are failing to adapt amid today’s environment of unprecedented technological change.
Innovation is occurring faster than the market can fully appreciate, and no company or sector is immune against this risk. Investors must evaluate which companies in their portfolio are most likely to be disrupted, where those lacking in technological innovation may run the risk of failure, and ultimately, underperformance. XOUT takes the 500 largest US companies and excludes the 250 names deemed most at risk.
Furthermore, XOUT seeks to take advantage of passive investing’s biggest flaw – buying every company in an index, even those in long-term secular decline.
“Disruption is one of the most significant, forward-facing risks impacting investors and companies today,” says David Barse, Founder and CEO of XOUT Capital. “The XOUT approach is simple – look to cut out the losers and you’re left with a portfolio that may be better positioned to outpace the broader market. Having spent most of my career in the asset management industry trying to build portfolios of winners, I now know it may be much easier to simply exclude losers.”
XOUT’s rigorous quantitative framework analyses a variety of fundamental characteristics, such as revenue growth, employee growth, reinvestment in company stock, earnings sentiment, research and development, management performance and profitability, to identify which companies face the highest risk of being disrupted. Index constituents are re-evaluated on a quarterly basis to accommodate the reality of the rapidly changing investment environment.
“GraniteShares is thrilled to partner with David Barse and XOUT Capital on this unique investment idea,” says Will Rhind, Founder and CEO of GraniteShares. “A first-of-its-kind ETF, XOUT firmly aligns with our mission of offering innovative investment solutions that challenge conventional thinking. With XOUT, more important than what you put in your portfolio is what you leave out.”
XOUT joins GraniteShares’ expanding ETF suite, which includes one of the lowest-cost physical gold ETFs (BAR), two broad-based commodity ETFs (COMB and COMG), the lowest-cost* physical platinum ETF (PLTM) and a high alternative income-focused fund that invests in pass-through securities (HIPS). GraniteShares has experienced robust growth in 2019, recently surpassing $700 million in total assets under management.
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