said Monday it plans to launch an exchange-traded fund that will track the
America's Fastest Growing Companies
index of 500 mostly small-cap firms.
The fund, which will trade on the
American Stock Exchange once it receives final regulatory approval, is the first in a series of equity exchange-traded funds Nuveen plans to launch this year. Nuveen already offers a variety of fixed-income ETFs.
Nuveen licensed the rights to the America's Fastest Growing Companies from
Individual Investor Group
. The initial
market capitalization required for the index ranges from $100 million to $2 billion, but the fund will not remove a company once it has gotten too big, says Nuveen managing director Gary Gastineau.
Instead, the fund portfolio will be adjusted quarterly, with the bottom 10% of companies in the index, or any company that has not reported earnings within 90 days of its previous quarterly report, eliminated. Those companies are replaced by companies not already in the index with the requisite market cap, earnings of at least 5 cents per share and an average daily trading volume of at least $100,000 in the 60 days leading up to the quarterly adjustment.
If two companies in the index decide to merge, they would remain in the fund as the combined entity, says Gastineau. If a company is acquired by a company not included in the index, however, that entity would be replaced in the fund, he says.
"It's trying to minimize turnover, which is costly, and minimize rebalancing," says Gastineau.
The fund's expense ratios have not been determined yet, but Gastineau said they would be in line with other similar funds.