Recently, TipRanks debuted its first ETF: the DefianceKSM TipRanks Analyst ETF (RANK). Constructed in collaboration with both Defiance ETFs and VettaFi, RANK offers exposure to 50 large-cap companies that are both highly recommended by analysts and seeing significant price momentum. This is done through the use of the TipRanks US Momentum Analysts iNDEX, which leverages TipRanks’ expertise and analyst data.
Key Takeaways:
- Brian Coco, chief product officer at TMX VettaFi, and Julie Gillespie, marketing manager and head of TipRanks TV, held a discussion over the recently-launched DefianceKSM TipRanks Analyst ETF (RANK).
- In the video, Coco broke down RANK’s index methodology, the advantages of leveraging TipRanks’ data, and more.
- Coco noted that RANK offers a strong use case for those who already use TipRanks, along with advisors seeking a compelling momentum approach.
To celebrate the launch of RANK, Brian Coco, chief product officer at TMX VettaFi, joined Julie Gillespie, marketing manager and head of TipRanks TV, to dive into the fund. Together, Coco and Gillespie discussed RANK’s investment philosophy, use cases, and much more.
The TipRanks Advantage
To start, Gillespie asked Coco how RANK’s use of TipRanks’ data set and focus on analyst enthusiasm created a good case for an index. Coco explained that one advantage of the TipRanks methodology is the vast history behind the data.
“All of the great work that TipRanks has done over the last decade to procure that data allowed us to actually run back tests,” Coco said. “It’s one thing for a data set to be out there, created recently. But I think what’s great about the TipRanks data is there was a depth of history that we could [use to] prove if the thesis worked.”
See More: Harnessing Consensus & Momentum: Defiance Debuts RANK ETF
Building a Compelling Index
Moving on, Gillespie asked Coco to break down the methodology behind RANK’s index. Coco noted that this index actually begins by using the VettaFi US Equity Large-Cap 500 Index, which constitutes the top 500 U.S. stocks by size.
From there, the index team takes those 500 companies and looks for the 100 with the highest TipRanks scores. This score is based on analyst recommendations, through the use of TipRanks’ data and methodology. Lastly, the index team takes the 100 remaining stocks and screens them, based upon momentum, to find the top 50.
Crucially, Coco pointed out that the index has a cap on both single-company and sector weightings within its portfolio. Capping stocks at 6% and sectors at 40% helps to mitigate overconcentration concerns.
“It really brings down some of those tech names, to get back down to that 6% cap,” Coco added. "It also has brought down the tech sector. If we look at this index against other popular momentum indices that are usually about half tech, ours is around 40% tech. So, it’s still giving you where the buy recommendations are, but ultimately a little bit more diversified.”
See More: Where Fundamental Analysis Meets the Chartists: The Launch of Defiance’s RANK ETF
Who is RANK For?
Towards the end of the video, Gillespie asked Coco what type of investor he thinks RANK appeals to. Coco noted that users of TipRanks are going to be a key audience, given that they already know and trust TipRanks’ data. However, he pointed out that there are plenty of advisors who could employ this fund within their portfolios as well.
“There’s quite a few financial advisors that use other momentum strategies that are really just based on those price signals and don’t have the other buy and sell recommendations built into them,” Coco added.
Gillespie and Coco discussed far more across the video. Topics include collaboration with Defiance ETFs, how the index has behaved, and more.
Watch the Full Interview
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vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for the RANK, for which it receives an index licensing fee. However, RANK is not issued, sponsored, endorsed, or sold by VettaFi. VettaFi and its affiliates have no obligation or liability in connection with the issuance, administration, marketing, or trading of RANK.
