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What Lies Ahead For Trim Tabs' New International FCF ETF?

Jul. 13, 2017 2:54 AM ETICOW, GCOW
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A company's cash position is the true reflection of its financial health. In fact, a profit-making company may be a candidate which runs out of cash. On the other hand, cash-rich companies can wait out any broader market volatility with ease.

Since a cash cushion is always needed in a rough market, one can easily take a look at the indicators related to cash flows to measure the performance of a company. This is where the free cash flow metric gains prominence.

One of the important factors that makes free cash flow a highly dependable metric is that operating cash flow adds back non-cash charges such as depreciation and amortization to net income, truly diagnosing the financial health of a company. The metric measures "the quantity of cash a company generates each reporting period after accounting for future organic growth," as per Trim Tabs Asset Management.

Probably, this is why several issuers are stressing on free cash flow (FCF) or FCF yield while launching products. In this suite, TrimTabs All Cap International Free-Cash-Flow ETF (TTAI) is one of the new entrees. Let's delve a little deeper.

TTAI in Focus

The fund looks to provide long-term returns that exceed those of the S&P Developed Ex-U.S. Index. The actively managed fund targets about 85 companies in non-U.S. developed markets that are "generating free cash flow, reducing their share count and maintaining healthy balance sheets."

The fund has maximum exposure to the industrials sector while consumer staples, healthcare and materials sectors take the next three spots. WH Group Ltd. (OTCPK:WGHPY), FNAC (OTC:GROPF), DARTY (OTC:KESAF) and Cash & Other are the top three holdings of the fund. No holding accounts for more than 1.31% of the portfolio. The fund charges 59 bps in fees.

How Could it Fit in a Portfolio?

The fund could

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