Invest Like A Billionaire With This Unique ETF

The term “Billionaire” has become quite sensitive for many since Trump’s election as U.S. President, and this caused us to do some thinking on the ETF front in terms of “Billionaires.”

There happens to be a “Billionaire” focused ETF that we have profiled here in the past that deserves another look. This fund is known as Direxion iBillionaire Index (IBLN) (Expense Ratio 0.65%, $17.2 million in AUM), and it launched back in August of 2014.

According to fund literature “IBLN is designed to help long-term investors pursue a better portfolio outcome by seeking excess returns relative to the S&P 500 Index. This strategic beta ETF provides investors with access to the index that isolates the leading 30-large cap equities in which a select group of U.S. investment billionaires have allocated the most assets, based on data from Securities and Exchange Commission 13F filings.”

Readers may note the term “strategic beta” that is used here and recall that we recently covered several “smart beta” products in this column. When we look at what is inside of this portfolio we see a heavy dose of Technology companies, making up nearly 40% (39.89%) of the overall fund. Other sectors that are represented here are Consumer Discretionary (23.83%), Consumer Staples (9.9%), Health Care (9.85%), Materials (6.68%), Industrials (6.53%), and Financials (3.32%).

Not only might these sector allocations surprise some (i.e. Financials has the lowest weighting) but the top ten holdings in the fund might also surprise some whom may not readily link these companies as being popular investment vehicles of billionaire investors. The top holdings are as follows: 1) GOOGL (6.77%), 2) CHTR (3.67%), 3) AAPL (3.57%), 4) TWX (3.57%), 5) AVGO (3.54%), 6) DOW (3.53%), 7) MSFT (3.50%), 8) AGN (3.45%), 9) EBAY (3.44%), and 10) GM (3.44%).

How exactly are these stocks selected? Direxion’s fund literature further states, “1) Up to 10 billionaires selected from a pool based on several criteria including personal net worth, source of wealth, portfolio concentration, turnover, and performance over time. 2) Stocks selected based on highest allocations by 5-10 billionaires. 3) Stocks must be listed on the NYSE, or NASDAQ, and have at least $1 billion in market capitalization. 4) Each of the 30 companies in the index is allocated a fixed equal weight of 3.33%. 5) Rebalanced quarterly).”

IBLN is also within a few cents of a new 52-week high today, making it another fund to keep a close eye on in the coming weeks and months.

IBLN-2017-02-02

The Direxion iBillionaire Index ETF (NYSE:IBLN) was trading at $26.67 per share on Thursday morning, up $0.23 (+0.87%). Year-to-date, IBLN has gained 6.21%, versus a 1.99% rise in the benchmark S&P 500 index during the same period.

IBLN currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #24 of 32 ETFs in the Large Cap Growth ETFs category.


Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.

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