Today, Rainwater Equity made its ETF debut with the launch of the Rainwater Equity ETF (RW).
An actively managed fund, RW’s goal is to provide capital appreciation with a long-term time horizon. The ETF has a net expense ratio of 1.25%.
As a whole, RW looks to construct a portfolio with a focus on equities that display resilient potential for growth. This includes evaluating company leadership to assess the firm’s focus on delivering long-term results.
“We invest in dominant businesses that generate repeat purchases from loyal customers — software providers, waste haulers, auto parts manufacturers, and stock exchanges,” said Joseph Shaposhnik, Rainwater Equity founder and portfolio manager. “These companies tend to grow free cash flow more predictably and experience fewer negative surprises. We hold them for the long term.”
Constructing a Long-Term Portfolio
Rainwater Equity’s investment process revolves around examining companies based on a number of crucial growth factors. To do so, the RW portfolio team inspects the recurring revenue and cash flow prospects for each potential security. By doing so, fund management looks to build a targeted portfolio of durable companies.
The quality of a company’s leadership team plays a crucial role in deciding whether RW will invest in a stock. In particular, RW’s fund strategy looks for company leadership focused on offering consistent results and distributing shareholder capital.
Notably, RW reserves the opportunity to invest in companies across the cap spectrum. That said, the fund’s portfolio is mostly focused on large- and midcap equities.
This broad company approach extends to building global exposure. RW may choose to invest in companies across the globe, including those from emerging markets.
Traditionally, opening up investments to global assets, especially emerging markets, can lead to higher portfolio risk. However, RW’s active portfolio team and long-term time horizon can put it in a better position to navigate near-term volatility.
RW comes online as investor demand grows for active management and long-term strategies. As such, the fund may prove itself to be an ideal vehicle for bolstering capital appreciation amid the current macroeconomic uncertainty.
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