ETF newcomer Syntax Advisors is listing an interesting new fund that “stratifies” the S&P 500 into separate categories based on business risks. The Syntax Stratified LargeCap ETF (SSPY) will hold all the same companies as the S&P 500. But they will be grouped into tiers based on shared business risks, which “occurs when two or more companies’ earnings are affected by the same fundamental drivers,” the prospectus says.
The index uses patented stock selection criteria, meaning the prospectus doesn’t give away too much about how the stratification works. The index rebalances quarterly on the third Friday of each month. Companies will be equally allocated between eight industry sectors: consumer, energy, financials, food, healthcare, industrials, information, and information tools.
We are reaching out to Syntax to try and learn more about their methods.