RAFI Indices, , a subsidiary of Research Affiliates, , has launched its first ETF, the Research Affiliates Deletions ETF (NIXT). This groundbreaking ETF tracks the Research Affiliates Deletions Index, designed to capitalize on the long-term price reversal of companies removed from market capitalization weighted indices. NIXT will begin trading on September 10th, 2024.
The strategy selects securities that drop out of the top 500 or top 1000 U.S. companies by market capitalization and holds them for 5 years in an equal-weight portfolio, rebalancing annually. It uses a 10% banding to reduce turnover. The NIXT strategy may be suitable for investors seeking small cap value exposure and aims to provide structural, uncorrelated alpha through a simple, rules-based index format.