With a name reflecting its expertise in smart indexing, Indexperts is carving out a niche that recognizes market realities. In response to increasing market volatility and geopolitical challenges, the firm offers a flexible, middle-ground approach that combines the best elements of passive and active strategies.
Based in Charlotte, North Carolina, the wealth management firm provides an innovative solution that balances both approaches, enhancing investor outcomes without forcing a choice between traditional indexing and costly active management.
The Best of Both Worlds
To be clear, Indexperts’ ETFs are ultimately actively managed products. However, they incorporate the efficiency and objectivity of indexing and mainly rely on their active capabilities to provide a layer of quality assurance that passive funds can’t provide. This approach minimizes unnecessary risks while maintaining cost-effectiveness. By refining the selection process, Indexperts aims to create portfolios that are built to withstand market volatility.
Rather than passively tracking an index, Indexperts applies earnings and fundamental screens to eliminate weaker companies that could drag down performance. This approach helps investors build a portfolio with more resilience, particularly during market downturns.
As a subsidiary of Linden Thomas & Company, Indexperts shapes its investment strategy through firsthand experience in wealth management. Due to its operations in the area of private wealth management, the firm says it has deep insights into the conversations advisors have with investors. This perspective drives its belief that investors benefit from a more refined selection process rather than indiscriminately holding all companies within a given index.
A Balanced Strategy
Indexperts argues that while broad-based indexing eliminates emotional decision-making, it can also expose investors to failing companies. Historically, struggling firms have lingered in major indices long after warning signs emerge, leading to avoidable losses. To counteract this, Indexperts applies earnings and fundamental screens to weed out weaker businesses before they erode portfolio value.
Earlier this year, Indexperts introduced three ETFs — the Indexperts Gorilla Aggressive Growth ETF (RILA ), the Indexperts Quality Earnings Focused ETF (QIDX ) and the Indexperts Yield Focused Income ETF (YFFI ).
RILA aims to deliver strong long-term returns by building a diversified equity portfolio that targets assets of all market capitalizations to maximize growth. The fund primarily invests in a blend of stocks from the Indexperts All Cap Quality Growth 150 Index and the Indexperts Large Cap Quality Growth Index. However, it also adjusts its sector and security allocations based on prevailing market conditions to optimize performance.
Like RILA, QIDX invests in equities across the entire market capitalization spectrum, but with a specific focus on companies that have a consistent history of growth and stable earnings. The fund’s portfolio is largely built from domestic equities in the Indexperts Large Cap Core Growth Index, Indexperts Large Cap Core Value Index, Indexperts Mid Cap Consistent Value Index, and the Indexperts Small Cap Consistent Value Index. QIDX uses a variety of factors to determine target allocations, including Federal Reserve policies, macroeconomic conditions, and the performance of individual securities or sectors.
Lastly, YFFI aims to provide investors with current income through a diversified selection of fixed-income securities. The fixed income fund primarily allocates its net assets to investment-grade fixed income assets, such as corporate bonds, Treasury notes, and asset-backed securities. The fund’s managers are looking for strong income and yield potential, selecting securities of various maturities and durations to achieve dynamic returns.
Looking Ahead
Indexperts plans to expand its ETF offerings while maintaining its commitment to simplicity and strategic allocation. By refining traditional indexing to incorporate selective screening, the firm is providing a powerful alternative in today’s ETF landscape.
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