Rational Deletions ETF (NIXT)
NASDAQ (NMS) NASDAQ (NMS) Primary Summary
NIXT Chart
NIXT: Betting On Index Deletions Won't Make You Rich
NIXT selects stocks that were deleted from cap-weighted Indices similar to the S&P 500 and the Russell 1000. The basic concept is these stocks are oversold and will eventually outperform. The strategy is contrarian and inherently anti-momentum, which means investors must ignore other well-researched factor models that suggest momentum is a powerful factor. Furthermore, NIXT's fundamentals reveal its holdings were deleted for good reasons, such as negative profit margins and low-single-digit growth rates.
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Rational Deletions ETF Investors
| Name | Quantity | Cost | Value | Profit ($) | Gain (%) |
|---|---|---|---|---|---|
| KA Katherine Andersen Western Pacific Wealth Management LP | 500 | $13,210 | $15,875 | $2,665 | 20.17% |
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Rational Deletions ETF Profile
| NASDAQ (NMS) Exchange | US Country |
Overview
NIXT is a unique investment fund that focuses on a specific niche in the equity market—recently deleted US small- and mid-cap stocks that are screened for quality. The foundation of NIXT's investment strategy lies in capitalizing on the potential long-term reversal fortunes of stocks that have been removed from leading indices. It operates under the premise that these stocks, after being dropped from the Cap-Weight 500 and Cap-Weight 1000 indices, might offer significant upside potential over time. The selection process for the stocks is rigorous, leveraging a comprehensive quality assessment based on a variety of financial health metrics. This investment approach aims to create a diversified portfolio that not only manages risk through its focus on quality but also seeks to exploit the market's tendency to undervalue companies that have recently been excluded from major indices.
Products and Services
- Index of Recently Deleted US Small- and Mid-Cap Stocks
- Quality Screening and Selection Process
- Equally Weighted Portfolio Strategy
- Annual Reconstitution and Rebalancing
This product is the heart of NIXT's offering, consisting of a curated index that targets stocks recently ousted from the top 1000 and top 500 US companies in the RAFI Global Equity Investable Universe (GEIU). The idea is that these stocks, now free from the constraints and expectations that come with index inclusion, have the potential for significant growth. By focusing on recently deleted stocks screened for quality, NIXT offers investors a unique angle to potentially profitable investments that are overlooked by the broader market.
NIXT employs a meticulous selection process to sift through the stocks that have been removed from the benchmark indices. This process involves evaluating each stock based on key financial health indicators such as debt coverage ratio, equity and debt issuance, changes in leverage, and payout metrics. Only those stocks that meet the stringent quality criteria — top 80% based on their scoring — are added to NIXT's index. This selective process ensures that the portfolio represents a high-caliber selection of stocks poised for a potential rebound.
Upon selection, the chosen stocks are equally weighted within NIXT's portfolio. This strategy ensures that the fund's performance is not disproportionately influenced by any single company, thereby spreading risk more evenly across the portfolio. The equal weighting also emphasizes the fund's focus on each stock's potential to contribute to overall returns, rather than letting market cap drive the allocation. This approach is especially suited to the investment thesis of capitalizing on overlooked or undervalued companies.
NIXT's portfolio is not static. It undergoes an annual reconstitution in April and a subsequent rebalance in May. This annual cycle allows NIXT to refresh its portfolio, ensuring that it remains aligned with its strategic objective of focusing on quality stocks poised for a rebound. During the reconstitution, stocks that no longer meet the fund’s criteria—such as those whose market caps have grown significantly, re-qualifying them for index inclusion—are removed. New candidates are assessed and added, maintaining the portfolio’s focus and dynamism.
