By Carl Delfeld of ETF Passport
Every morning at market opening I check the S&P 500, the Dow Jones Industrial, the MSCI Emerging Market index, Nasdaq and the Chartwell Global 30 to see how global markets are trending.
The Chartwell Global 30 - you probably haven’t heard of that one - yet.
In April 2005, I had an idea prompted by a question. Why do so many market mavens and pundits remain preoccupied with the Dow Jones Industrial Average? Sure, founded by Charles Dow in 1896, it has a distinguished and rich history but as a diversified basket of 30 large American multinational companies, why would people check all day long to see how the index was doing?
In addition, there is an exchange-traded fund or ETF that tracks the Dow Jones index called the Diamond Trust Series (DIA) allowing investors to access this basket of 30 companies in a convenient manner. The Diamond ETF has amassed over $9 billion in assets.
My thought was that if the Dow Jones Industrial basket of companies were largely multinationals with companies like McDonalds garnering 76% of their revenue from overseas markets, why limit the menu to only American companies? The Dow Jones link to the US economy was already tenuous, why not cut the knot and go global?
Thus was born the Chartwell Global 30 – a basket of 30 large companies with about half headquartered in America and the rest sprinkled around the globe. For simplicity, while the Dow is price-based weighted, the Chartwell Global 30 is equal weighted.
Like the Dow, I tried to get substantial diversification both by industry and geography. The Chartwell Global 30 is more actively managed than DIA as I select what companies are most attractive based on valuations while still maintaining good diversification. Currently, the sector breakdown is as follows: 13% consumer staples, 7% consumer discretionary, 13% medical, 8% basic materials, 7% computer/tech, 13% energy, 26% finance, and 7% transportation. The portfolio has a price to book of 1.9, a price to sales of 1.2 and a dividend yield of 2.04%.
The global approach allows me the flexibility to search for the best of breed in each category and oftentimes I pair an American company with an international firm. A couple of examples are JP Morgan Chase (JPM) with HSBC (HBC) and Novartis (NVS) with Pfizer (PFE).
As we approach the 5th anniversary of the Chartwell Global 30, it is time to take stock of its performance against the Dow Jones Industrial Average and the Diamond ETF that tracks it.
The numbers are encouraging, before any fees, the Chartwell Global 30 measured on the FOLIOfn platform, is up 39.19% since April 1, 2005 versus just 8.9% for the Diamond ETF (DIA).
In addition, it did even better against the ETF that tracks a basket of the largest 100 companies in the world, the S&P Global 100 (IOO). IOO is up only 5.09% since April 1, 2005.
Gentle reader, whether an investor or advisor, you too can build your own ETF.
Of course, the Chartwell Global 30 is not exactly an ETF because it doesn’t trade on an exchange so please do not call me for its ticker symbol just yet. It is also not exactly a fund since it is not registered with the SEC.
Still, some of my clients have happily invested in the Chartwell Global 30 (portfolio) and the dream of having $9 billion in it keeps my blood pumping. With innovative new ETF launching platforms like AdvisorShares up and running, my ticker symbol may not be far off.
Even better would be Maria Bartiromo cooing every morning, “……….the Chartwell Global 30 is up 1.2% this morning as global markets responded to….”
Now that would be something.
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