FocusShares has filed paperwork with the SEC for a “Focus Morningstar Small Cap Index ETF.” The Focus Morningstar Small Cap Index ETF (the “Fund”) seeks to provide investment results that correspond, before fees and expenses, generally to the price and yield performance of the Morningstar Small Cap Index (the “Underlying Index”). The Underlying Index measures the performance of stocks issued by small-capitalization companies as determined by Morningstar, Inc.’s (“Morningstar”) proprietary index methodology. FocusShares did not specify a trading symbol or operating expenses in the initial filing.
Principal Investment Strategies
The Morningstar Small Cap Index measures the performance of stocks issued by small-capitalization companies that are domiciled or principally traded in the United States, as determined by Morningstar, Inc.’s (“Morningstar”) proprietary index methodology that meet specific criteria developed by Morningstar, and is a “float-adjusted” capitalization index. The Underlying Index methodology defines “small-capitalization” stocks as those stocks between the 90th and 97th percentile of the market capitalization of the stocks eligible to be included in the Morningstar US Market Index (a diversified broad market index that represents approximately 97% of the market capitalization of publicly-traded US stocks). As of September 20, 2010, the Underlying Index was comprised of 728 component securities with market capitalizations greater than $257.02 million that have a daily average traded volume of at least $446,352.56 over the past three months. The total market capitalization of the Underlying Index as of September 20, 2010 was in excess of $893.21 billion.
Indexing Investment Approach. The Fund is not managed according to traditional methods of “active” investment management, which involve the buying and selling of securities based upon economic, financial and market analysis and investment judgment. Instead, the Fund, utilizing a “passive” or indexing investment approach, attempts to approximate the investment performance of the Fund by investing in a portfolio of securities that generally replicates the Underlying Index. The Fund may or may not hold all of the securities in the Underlying Index and may, from time to time, engage in a representative sampling strategy.
The Fund will invest at least 90% of its assets in securities of the Underlying Index. A lesser percentage may be so invested to the extent that the Fund’s investment advisor, FocusShares LLC (the “Advisor”), needs additional flexibility to comply with the requirements of the Internal Revenue Code of 1986, as amended (the “Code”), and other regulatory requirements.
For the complete filing click: HERE