Obviously, identifying winners is the name of the investing game, but there are plenty of examples of avoiding losers being a valid strategy.
What Happened: Some exchange-traded funds make it a point to avoid weak stocks. That group includes New Age Alpha's Avoider ETFs: The AVDR US LargeCap Leading ETF (CBOE:AVDR) and the AVDR US LargeCap ESG ETF (CBOE:AVDG), both of which launched Wednesday.
The concept of loser avoidance isn't new to the ETF space. One of the established funds in the group rapidly developed a track record of topping broader benchmarks and attracting an audience, so the new ADVR and ADVG are entering potentially fertile territory.
Why It's Important: AVDR, New Age Alpha's domestic large-cap solution, filters out the 450 largest domestic equities with the highest human factor scores “resulting in a portfolio that consists of the 50 stocks with the lowest Human Factor that seeks to deliver alpha over existing large-cap benchmarks,” according to the issuer.
The premise is simple: Avoiding high human factor scores can help investors dodge stocks that are richly valued.
