Motley Fool Asset Management, LLC (the “Adviser” or “Motley Fool”) serves as the investment adviser to the Motley Fool 100 Index ETF. The Fool 100 Index, which the ETF tracks, was developed by The Motley Fool, LLC (“TMF”), an affiliate of the Adviser. Established in 2017, the Fool 100 Index is a proprietary, rules-based index designed to monitor the performance of the 100 largest and most liquid U.S. companies recommended by TMF’s analysts and newsletters. To be eligible for inclusion in the Fool 100 Index, a company must be among the 100 largest domestic firms by market capitalization in TMF’s “recommendation universe,” which includes companies domiciled in the United States and actively recommended by TMF or highly rated in TMF’s analyst opinion database. The Fool 100 Fund primarily seeks to replicate the performance of this index and, under normal circumstances, invests at least 80% of its total assets in its component securities.
The Motley Fool 100 Index ETF, an exchange-traded fund (ETF), primarily follows a passive management strategy, aiming to replicate the total return performance of the Fool 100 Index. This index consists of the 100 largest and most liquid U.S. companies recommended by The Motley Fool, LLC. To be eligible for inclusion, companies must belong to the top 100 by market capitalization in TMF's recommendation universe, including those actively recommended by TMF's newsletters or among the highest rated in TMF's analyst opinion database. The Fool 100 Fund generally invests in all component securities of the Fool 100 Index, though it may use a representative sampling strategy under certain circumstances. While dividend income may not be its primary focus, investors can expect dividend distributions from the constituent companies based on their individual dividend policies and performances.
Tracking the Fool 100 Index is the primary objective of the TMFC ETF. This exchange-traded fund (ETF) employs a passive management approach, designed to closely mimic the total return performance of the Fool 100 Index before accounting for fees and expenses. The Fool 100 Index is a proprietary, rules-based index developed by The Motley Fool, LLC, aiming to track the performance of the 100 largest and most liquid U.S. companies recommended by TMF's analysts and newsletters. Under normal circumstances, the TMFC ETF invests at least 80% of its total assets in the component securities of the Fool 100 Index. It typically employs a replication strategy, meaning it invests in all of the component securities of the index. However, in certain situations, the ETF may use a representative sampling strategy to achieve its investment objective. Additionally, the ETF may allocate up to 20% of its assets to securities or other investments not included in the Fool 100 Index, which the adviser believes will aid in tracking the index effectively. It's important to note that the Fool 100 Fund may concentrate its investments in specific sectors to a similar extent as the Fool 100 Index if the index itself holds a significant portion of its assets in a particular industry. As of August 31, 2022, the health care, information technology, communication services, and consumer discretionary sectors represented a significant portion of the Fool 100 Index. The fund may also engage in securities lending to enhance income generation and has elected to qualify as a regulated investment company under the Internal Revenue Code.
The correlation aspect of the Motley Fool 100 Index ETF (TMFC) primarily reflects its attempt to track the total return performance of the Fool 100 Index, consisting of the 100 largest, most liquid U.S. companies recommended by The Motley Fool. Given its close alignment with this specific index, TMFC's correlation with the performance of the selected companies is expected to be quite high, making it a reliable tool for investors seeking exposure to these specific large-cap U.S. stocks. While the exact correlations with other assets may vary, TMFC's focus on the Fool 100 Index provides investors with a straightforward way to gain exposure to a portfolio of companies favored by TMF's analysts and newsletters.
The TMFC Sector is primarily composed of companies within the healthcare, information technology, communication services, and consumer discretionary sectors. As of August 31, 2022, these sectors represented a significant portion of the Fool 100 Index, which the TMFC ETF tracks. This sector concentration allows investors to gain exposure to leading U.S. companies in these industries, providing the potential for growth and innovation-driven returns. However, it's essential to note that a concentrated focus on specific sectors can increase the fund's risk level, as it may be more susceptible to market fluctuations within those industries.
The exposure characteristic of the TMFC ETF (Motley Fool 100 Index ETF) is centered on the Fool 100 Index, which tracks the 100 largest and most liquid U.S. companies recommended by The Motley Fool's analysts and newsletters. This ETF provides investors with exposure to a diverse range of sectors, including health care, information technology, communication services, and consumer discretionary. The Fool 100 Fund seeks to replicate the performance of its index through a replication or representative sampling strategy, and it may invest up to 20% of its assets in securities not included in the index to track it effectively. For a more in-depth analysis of TMFC's exposure and correlations, investors can utilize ETF Insider's web app, which provides comprehensive data and visualization tools for U.S. ETFs.
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