Bracket Madness: ETF Style

by on March 1, 2013 | ETFs Mentioned:

One of the hottest sports events in the United States is slated to kick off on March 19, as 64 NCAA basketball teams will duke it out to see who takes the championship crown. While most eyes will be fixed on major sports networks for constant scores and updates, we will be offering investors with another place to look. Starting with the final 16 seeds, we will be releasing a Bracket Madness competition of our own, pitting the biggest exchange-traded funds in the world against each other [for more ETF news and analysis subscribe to our free newsletter].

How It Will Work

Once the NCAA event is down to just 16 teams, we will post our initial bracket containing the 16 largest ETFs by assets. The bracket will be downloadable for those who wish to follow along at home. As each new bracket level is finalized in the live tournament, so too will the bracket of the ETF matchups. Scores for the previous week will be posted, and the winners will move on to the next round as each fund reaches for this year’s coveted crown.

BasketballThe scoring will be based on a five-point relative system. Just like in real basketball, all matchups will be decided by factors only relative to the two ETFs currently going head-to-head, so a fund that makes it through to the next round will not necessarily continue on. The matchups will be judged by a five-point scale, with one point awarded for each of the following:

  1. Lowest Expense Ratio
  2. Highest Assets Under Management
  3. Highest Yield
  4. Lowest 200-Day Volatility
  5. Highest 3-Year Return

Note that on the rare occasion that two funds have the same expense ratio it is possible to actually have a tie; in this case it will be broken by trailing one-year performance. Whichever fund scores the most points gets to move on. Each game will have a total of five points (barring an expense ratio tie), and some of the results may surprise you. So get ready, get your bracket filled out, and be sure to let us know how you did each week!

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Disclosure: No positions at time of writing.