Content provided by Paula Wieck, CLS Portfolio Manager
CLS is an investment firm that specializes in ETFs. So, why do we consider ourselves specialists?
Did you know that we analyze over 200 data points on over 1,200 ETFs on a daily basis? That’s about a quarter of a million statistics which aid us in the investment decision making process. As one of the leading ETF strategists in the country, a lot more goes into our decisions than selecting a sector or regional ETF with the lowest cost or greatest liquidity. Since I will probably lose you if I go into all of our statistics, let me highlight a few which you may find of interest (in addition to performance and risk metrics):
- We monitor multiple valuation metrics for over 1,200 ETFs, including P/E, P/Sales, P/Cash Flow, P/Book, and Dividend Yields
- We track fundamental statistics such as Growth Rates as well as quality statistics such as ROE, ROA, Net Profit Margin, and Debt to Capital at the ETF level for over 1,200 ETFs
- We monitor almost 20 different trading technical indicators in an effort to determine the best entry and exit points for the vast majority of the ETF universe
- In addition to expense ratios, the investment team evaluates the differences in the cost of holding the ETF and the market impact cost of trading the ETF which helps us determine which ETF is the best fit for our intentions (short-term tactical or longer-term strategic) in the portfolios
- We review the legal structure of the ETF and the possible tax implications for an investor
- We review each ETF’s sensitivity factors such as (but not limited to) inflation, home sales, Treasury yields, lumber, gold, the dollar, and emerging markets sensitivity
- We have a precise way of knowing exactly how much exposure an ETF has to a certain sector or region of the markets
- We not only make active decisions in tilting our portfolios from a macro top-down approach, but we also do a careful analysis choosing the best ETF to fit each strategy and purpose for the portfolios.
P/E ratio stands for the price-to-earnings ratio which is a valuation method obtained by dividing the market value per share by the earnings per share. P/Sales stands for price-to-sales ratio which is a valuation method obtained by dividing the company’s market cap by total sales over a 12-month period. P/Cash Flow stands for the price-to-cash-flow ratio is a valuation method obtained by dividing the share price by the cash flow per share. P/Book stands for the price-to-book ratio which is a valuation method obtained by dividing stock price by the product of total assets minus intangible assets and liabilities. Dividend yield is a ratio which shows the amount a company produces in dividends on an annual basis relative to sales price. It is calculated by dividing the annual dividends per share by the price per share. Return on equity (ROE) is an indicator used to measure the profitability of a company in terms of shareholder equity. It is calculated by dividing net income by shareholder equity. Return on assets (ROA) is an indicator used to measure the profitability of a company in relation to the company’s total assets. The return is calculated by dividing the net income by the total assets. The debt to capital ratio is a measurement of a company’s financial leverage. It is calculated by dividing the debt by the sum of shareholders’ equity plus debt.