Source Dividend Opportunity ETF

Cboe: DVOP

Listed December 27, 2019

The Fund is an actively-managed exchange-traded fund that pursues its investment objective by investing, under normal circumstances, at least 80% of its net assets (plus any borrowings made for investment purposes) in dividend yielding equity securities. Typically, the Fund will hold approximately 25 to 40 stocks, with the first ten stocks generally representing the top ten highest-yielding stocks of companies included in the S&P 500 Value Index at the time of purchase and as reconstituted on an annual basis.

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About Source Asset Management

Source Asset Management, LLC is dedicated to offering classic investment philosophies through Exchange Traded Funds (ETFs). ETFs are known for liquidity, low fees, tax efficiency and transparency. As the name implies, we aspire to be a source of return that helps clients hit financial targets.

Before co-founding Source Asset Management, Doug Romano was most recently head of mutual fund sales at SkyBridge Capital. Before SkyBridge, Mr. Romano was a vice president at AIG SunAmerica Asset Management, where he covered southern New England.

Before co-founding Source Asset Management, Brendan G. Voege, CFA was a portfolio manager at SkyBridge Capital, where he developed and launched the SkyBridge Dividend Value Fund (SKYIX) in 2014. The fund peaked at $500 million before being sold to Centre Asset Management in 2019. Between 2003 and 2014, Mr. Voege was a portfolio analyst, quantitative analyst, portfolio manager and senior vice president at AIG SunAmerica Asset Management Corp, where ran a $5.6 billion suite of rules-based portfolios. Mr. Voege's products have been featured in Barron's, Bloomberg, the Institutional Investor, Reuters and the Wall Street Journal.

The Source Dividend Opportunity ETF (DVOP) leans heavily on the work of Benjamin Graham, whom we consider to be the first quantitative analyst, and his most famous student, Warren Buffett. Our rulesbased strategy seeks to hold 33 high dividend paying US equity stocks.

The first 10 stocks are the Dogs of the Dow. At only 10 stocks, the Dogs of the Dow can be volatile, so we enhance the strategy with 23 extra stocks in an effort to dampen volatility and add to return. These 23 stocks are picked from the S&P 500 Value Index based on valuation, profitability and dividend yield. The valuation metric is similar to Enterprise Value to EBITDA (Earnings Before Interest, Taxes and Depreciation) and the profitability metric is similar to Return on Equity (ROE). The specific formulas are proprietary and were inspired by Warren Buffett’s annual reports.

We give 1/3 of the weight to the Dogs of the Dow and 2/3rds of the weight to the enhancement, equally weighting the stocks within each group. We aim to take advantage of momentum by letting our winners run and not doubling down on losing positions. With a focus on risk management, individual stock positions are capped at eight percent and we keep sector weights to less than double the S&P 500 Value Index.