New Active ETF filed

Virtus Duff & Phelps Clean Energy ETF

Ticker: VCLN
Exchange: TBD
Expense ratio: TBD
Original filing date: May 4, 2021
Effective date: July 19, 2021
Listing Date: TBD
CUSIP: TBD
Active: Yes
Index / Benchmark: Not Applicable
 
Investment Objective:
Seeks capital appreciation.
 
Investment Strategy / Index Methodology:

Investable Universe:

• Global stocks with minimum market cap of $500 million
• Sectors: utilities, industrials, technology and energy sectors that are involved in clean energy. 

Identify superior companies: 

• Production, provision, and transmission of energy
• Bottom-up analysis
• Quantitative and qualitative research

 
Constituents: TBD
 
Adviser: Virtus ETF Advisers LLC
Sub-Adviser: Duff & Phelps Investment Management Co.
Portfolio Managers: Benjamin Bielawski, CFA; and Eric Fogarty, CFA
Administrator: Virtus ETF Solutions, LLC
Fund accountant: The Bank of New York Mellon
Transfer agent: The Bank of New York Mellon
Custodian: The Bank of New York Mellon
Distributor: VP Distributors, LLC
Legal counsel: Stradley Ronon Stevens & Young, LLP
External accounting: TBD

 
Prospectus is here.

MORE ETF HEARSAY

 

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• LinkedIn: Henry Jim
• henry@etfhearsay.com
• Twitter: @ETFhearsay

Under normal market conditions, the Fund will invest not less than 80% of its net assets (plus the amount of any borrowings for investment purposes) in equity securities of clean energy companies. Duff & Phelps Investment Management Co., the Fund’s sub-adviser (the “Sub-Adviser”), defines clean energy companies as those that derive a majority of their value from one or more of the following clean energy businesses: 

(a) the production of clean energy (e.g., biofuel, biomass, hydroelectricity, solar energy, wind energy, and battery storage, among others); 

(b) the provision of clean energy technology and equipment; or 

(c) the transmission and distribution of clean energy. 

In determining whether a company derives a majority of its value from clean energy businesses, the Sub-Adviser may evaluate the company’s reported or estimated 

• Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA); 
• Free Cash Flow (FCF); 
• asset base; 
• customer base; 
• technologies or business segment; 
• long term sustainability; 
• displacement of current technologies; 
• and/or other similar criteria.

 

In seeking eligible investments, the Sub-Adviser starts by screening U.S. and non-U.S. markets, including emerging markets (i.e., those that are in the early stages of their economic development), for companies in the utilities, industrials, technology and energy sectors that are involved in clean energy. 

Companies are only considered for inclusion in the Fund’s portfolio if they are listed on an exchange and have a minimum float adjusted market capitalization of greater than U.S. $500 million. 

The Sub-Adviser then narrows the universe by focusing solely on companies involved in one or more of the three clean energy business segments discussed above. 

Next, the Sub-Adviser sets eligibility requirements to avoid companies that may be in the right sectors or appear attractive but are not truly clean energy companies, as defined by the Sub-Adviser. 

Once the Sub-Adviser has identified the investable universe, it applies a bottom-up research-driven process, with an emphasis on stock selection, to select the Fund’s final portfolio. 

The Sub-Adviser seeks to identify superior clean energy companies by performing an in-depth fundamental business analysis on securities within the targeted investment universe, which includes a qualitative and quantitative assessment of investment outlook, regulatory and political events, and financial strength. 

No individual security comprises more than 10% of the total portfolio’s market value at the time of investment. The Sub-Adviser will typically sell a security when it believes a more attractive opportunity is available, or its investment thesis changes.