Motley Fool Asset Management, the boutique firm owned by financial advice and investment platform The Motley Fool Inc., is launching two new exchange-traded funds.
This comes with The Motley Fool's rebranding, as the Alexandria company expands beyond its news business as a provider of financial instruments, the company announced Monday.
Exchange-traded funds, or ETFs, are a basket of related securities such as stocks, bonds or mutual funds that can be bought and traded as a single vehicle. ETFs track a specific industry, commodity or index. In November, Motley Fool Asset Management, also based in Alexandria, converted its two mutual funds into ETFs. The company’s newest ETFs, which officially launched Dec. 31, are the Fool Capital Efficiency 100 Index ETF (NYSE American: TMFE) and the Fool Next Index ETF (NYSE American: TMFX).
Motley Fool Asset Management, which is a separate company and subsidiary of The Motley Fool, launched its foray into ETFs a few years ago with The Motley Fool 100 Index ETF, the company's chief investment officer Bryan Hinmon said in an interview with the Washington Business Journal.
“We brought that to market to make available to the investing public the largest high-conviction stock ideas from our parent company, The Motley Fool. For years, people had to subscribe to our parent company’s newsletter services to get their stock recommendations. The Fool 100 ETF was the initial foray into making those large, high-conviction stock ideas all available at the click of a button," Hinmon said. “The next two ETFs we just launched are sort of the next steps in serving the world better and more completely.”
ETFs appeal to some investors over mutual funds because they can be traded during market hours, have tax and liquidity advantages and are lower-priced, Hinmon said.
“Both ETFs are designed to be convenient, cost-effective vehicles for individuals who want exposure to stock recommendations made by Motley Fool analysts across Fooldom,” Kelsey Mowrey, Motley Fool Asset Management’s president, said in a statement. “These new ETFs, along with our existing Motley Fool 100 Index ETF, are uniquely passive implementations of The Motley Fool’s active stock recommendations.”
The new Capital Efficiency ETF is based on an index that tracks The Motley Fool’s highest-scoring stock performance within its recommendations, measured by a company’s capital efficiency, or how the business turns investments into revenue and profit. The Next Index ETF is based on an index that tracks the performance of U.S. companies within The Motley Fool’s recommendations with mid- and small-capitalization.
“The Motley Fool made its name often finding small businesses, hidden gems that grew up to be tomorrow’s leaders," Hinmon said, adding that the Next Index ETF highlights The Motley Fool's recommendations and analysis of the burgeoning businesses ranked 101st and beyond.
Each of the two new ETFs will have a 0.50% management fee, with Hinmon and Lead Portfolio Manager Anthony Arsta serving as managers, the company said. The RBB Fund Inc., a New York City-based series trust, is overseeing the firm's fund.
