ZECP: Our Flagship ETF
The Zacks Earnings Consistent Portfolio ETF (Ticker: ZECP) forms the core of every ZECP+ portfolio.
The fund seeks to invest in companies with competitive advantage in their business models, by identifying those with stable projected earnings and low dispersion of future expected earnings relative to Zacks consensus estimates).
Historically, companies with superior business models are able to generate excess returns by achieving lower downside capture. This lower downside capture translates to outperformance in difficult market environments, such as recessions. ZECP maintains 50-60 companies that have generated stable annual earnings growth over the past 15 years.
The SMA Tilt Lineup
This growing suite of tilts covers a wide spectrum of themes, styles and sectors. This means any ZECP+ portfolio can incorporate multiple asset classes, through tilts like Small Cap growth and Fixed Income, as well as specific themes like ESG and Inflation.
The objective is to deliver a balanced and well-diversified portfolio that is attuned to the needs of the individual client.
Base Tilt (Small- and Mid-Cap Core)
The Base tilt provides access to stocks that, according to Zacks’ proprietary ranking models, are poised to outperform their respective benchmarks.
- 40-50 positions of small- and mid-cap stocks
- Combines with ZECP to create an all-cap core allocation
Fixed Income Tilt
The Zacks Investment Committee evaluates the client’s needs and preferences to determine the exact blend and duration of bonds to execute a customized ladder solution.
- Customized blend of fixed income investments
- Can include Treasuries, Corporates and Municipal securities
Preferred Equity Tilt (Preferred Stocks)
The preferred equity income tilt is designed to help investors capture yield and generate income.
- Blends traditional preferred, trust preferred and third-party trust preferred securities
- Focus on equity income
Inflation Tilt (Thematic)
This tilt invests in assets that are likely to provide protection in times of highly inflationary periods.
- Composed of approximately 75 companies with sustained track records of generating steady earnings
- Focuses on four sectors that are expected to outperform in inflationary economic environments
International Tilt (International Developed and Emerging Markets)
This tactical allocation provides exposure to both developed and emerging market nations so that investors can benefit from asset classes with historically low correlation with the US equity markets.
- Uses a number of country-specific ETFs to capture growth in foreign nations
- Can help establish a global portfolio allocation that supports risk-controlled growth
Long-Short Tilt (Alternative)
This tilt employs the long-short strategy, where long and short positions may offset one another, lowering net exposure to market direction. The objective is more diversification and less correlation with both equity and fixed income markets.
- Maintains 40-50 holdings to help provide downside protection in volatile markets
- Short positions are replace if they exceed 30% loss or fail to achieve target downside alpha scores
Equity Income Tilt (Large-Cap Value)
The equity income tilt contains stocks that have been identified as having a history of consistently raising and distributing dividends. This can aid the portfolio in markets that are experiencing downward pressure.
- Maintains around 40 positions
- Looks to maintain a dividend yield of around 3%
Small-Cap Growth Tilt
This tilt seeks to participate in the long-term growth projected by robust economic acceleration driven by economic reopening, accommodative monetary policy and fiscal stimulus.
- Maintains 90-100 positions in small-cap companies
- Each company in the Russell 2000 Growth Index is assigned a weighted average score
Innovation Tilt (Thematic)
The focus of this tilt is to provide exposure to companies generating or affected by the development of new products or services, technological improvements, or advancements in scientific research.
- Maintains about 20 large-cap stock positions from the Russell 1000 Growth Index
- Selection factors include research and development budgets, innovation correlation and patent quantities
ESG Tilt (Thematic)
The ESG (Environmental, Social and Governance) tilt seeks to pursue stable growth while maintaining environmental and social integrity. A portfolio optimizer helps to reduce risk and produce characteristics similar to those of the broad stock market.
- Maintains 40-50 positions across market caps
- Securities with positive ESG characteristics are selected from the universe of U.S.–listed equities and assigned composite scores
- Companies actively engaged in civilian firearms, controversial weapons, tobacco, thermal coal and oil sands are excluded
Premier Selection Tilt (Thematic)
Containing the “best ideas” from the Zacks Portfolio Management team, this tilt is designed for investors seeking more dynamic portfolio returns.
- Maintains a limited selection of 15-20 holdings across market caps
- Security selection identifies productive assets and positive earnings estimate revisions