Unlock the Potential of Underperforming Stocks with the Research Affiliates Deletions ETF
At Extreme Investor Network, we believe in finding hidden opportunities in the market that others may overlook. That’s why we are excited to introduce you to the Research Affiliates Deletions ETF (NIXT), a game-changing fund that focuses on stocks that have fallen out of the top indexes.
Recently, American Airlines, Etsy, and Bio Rad Laboratories were demoted from the S&P 500 due to underperformance. However, this could be a sign of a potential rally, according to Research Affiliates founder Rob Arnott. These stocks, often overlooked by traditional investors, form the backbone of the NIXT ETF.
The NIXT ETF buys and holds stocks that have dropped out of the top 500 or top 1000 stocks by market capitalization over the past five years. This contrarian strategy bets on the reversal of downward momentum, giving investors a unique opportunity to capitalize on undervalued stocks.
Arnott observed this rebound phenomenon back in the 1980s and has been successfully using this strategy in his personal account for years. The NIXT ETF uses custom indexes to identify deleted stocks, excluding the lowest quality ones through a rigorous quality screen process.
One key advantage of investing in deletions is their potential for outperformance. Data shared by Arnott shows that the index behind the Deletions ETF has outperformed the Russell 2000 Value Total Return Index over the past three, five, and 10 years. This strategy has proven to be effective in capturing value and creating upside potential.
Additionally, deleted stocks are often illiquid and thinly traded, leading to significant price movements when there is a high demand for their shares. This trend, combined with the strategy’s focus on profitability and debt coverage ratios, results in a carefully curated portfolio of undervalued stocks with substantial growth potential.
While not every stock that falls out of a large-cap index will benefit from this strategy, the winners tend to outweigh the losers, making it a compelling investment opportunity. Research Affiliates, a reputable investment advisory company managing roughly $147 billion in assets, has launched this innovative fund to help investors unlock the hidden potential of underperforming stocks.
At Extreme Investor Network, we are committed to bringing you cutting-edge investment opportunities that deliver real value. Join us in exploring the Research Affiliates Deletions ETF and discover a new way to invest in the market’s hidden gems.