The BUL ETF, also known as the Northern Trust Quality Dividend Defensive Index ETF, is an exchange-traded fund that aims to provide investors with exposure to U.S. domiciled large- and mid-capitalization companies with lower absolute volatility characteristics relative to the Northern Trust 1250 Index.

What is the underlying index that the BUL ETF aims to track?

The BUL ETF aims to track the performance of the Northern Trust Quality Dividend Defensive Index, which selects companies from the Northern Trust 1250 Index that exhibit financial strength, stability, and enhanced risk-return characteristics.

How does the BUL ETF achieve its investment objective?

The BUL ETF employs a passive or indexing approach, attempting to replicate the performance of the Northern Trust Quality Dividend Defensive Index through representative sampling. It invests in a sample of securities that collectively have a similar investment profile to the underlying index.

What types of companies are included in the BUL ETF?

The BUL ETF includes U.S. companies from various sectors that possess financial strength and stability, as well as enhanced risk-return characteristics. These companies typically exhibit lower overall absolute volatility relative to the broader market.

What are the characteristics of the Underlying Index that the BUL ETF seeks to emphasize?

The Underlying Index emphasizes factors such as management efficiency, profitability, and cash flow generation when selecting and weighting eligible securities. It aims to reduce overall portfolio volatility and maximize the quality factor compared to the Northern Trust 1250 Index.

5 min read

By Ron Koren, ETF Insider

What is the BUL ETF ?

In the world of finance, Exchange-Traded Funds (ETFs) have gained immense popularity among investors. These financial instruments offer a convenient and cost-effective way to diversify their portfolios and gain exposure to a wide range of assets. One such ETF that has caught the attention of investors is the BUL ETF. In this article, we will provide an overview of the BUL ETF, explore its underlying and exposure, discuss the benefits of investing in this ETF, and highlight some important considerations before making an investment decision.

BUL ETF: Overview

The BUL ETF is an exchange-traded fund that employs a "passive management" investment approach. In other words, it follows an indexing strategy designed to track the total return performance of a specific index, before considering fees and expenses. The index used by the BUL ETF is based on a proprietary methodology developed and maintained by Index Design Group, an affiliate of Pacer Advisors, Inc., which serves as the Fund's investment adviser.

BUL ETF: Underlying and Exposure

The BUL ETF aims to provide exposure to mid- and large-capitalization U.S. companies with high free cash flow yields. Companies with high free cash flow yields are commonly referred to as "cash cows." The initial universe of companies considered for inclusion in the index is derived from the component companies of the S&;P 900® Pure Growth Index.
To determine which companies make it into the final index, a screening process based on their average projected free cash flows and earnings over the next two fiscal years is conducted. Companies with negative average projected free cash flows or earnings are removed from consideration, and financial companies (except real estate investment trusts) are excluded altogether.
The remaining companies are then ranked based on their free cash flow yield for the trailing twelve-month period. The 50 companies with the highest free cash flow yield are included in the Index. As of June 30, 2022, the Index had a notable exposure to companies in the information technology sector.

BUL overlap What is the BUL ETF ?

BUL ETF: Benefits to Invest in This ETF

Investing in the BUL ETF offers several benefits for investors. Firstly, it provides a diversified exposure to a basket of mid- and large-cap U.S. companies with strong free cash flow yields. This diversification helps spread out the risk and can potentially lead to more stable returns.
Secondly, the BUL ETF's passive management approach means lower management fees compared to actively managed funds. Lower fees can significantly impact long-term returns, making the ETF an attractive option for cost-conscious investors.
Lastly, the correlation between the BUL ETF's performance and that of its underlying index is expected to be 95% or better. This indicates that the ETF's returns are likely to closely mirror the performance of the index, providing investors with a reliable investment option.

BUL ETF: Considerations Before Investing

While the BUL ETF offers many advantages, there are also important considerations to keep in mind before making an investment. As with any investment, it is crucial to assess your risk tolerance and investment goals to determine if the BUL ETF aligns with your overall portfolio strategy.
Additionally, investors should carefully review the ETF's prospectus, which outlines its investment strategy, risks, and expenses. Understanding the fund's underlying assets and how they align with your investment objectives is essential to make an informed decision.

Conclusion:

The BUL ETF is a passive investment vehicle designed to track the performance of mid- and large-cap U.S. companies with high free cash flow yields. It offers diversification, cost-efficiency, and potential correlation to its underlying index. However, before investing, investors should conduct thorough research and consider their risk tolerance and financial goals.

Disclaimer: This article is for informational purposes only and does not provide any investment advisory services.

Sources:
Information about the Fund's investment strategy and methodology is based on data provided by the Fund's investment adviser, Pacer Advisors, Inc.
Information about the Index is based on data from Index Design Group, an affiliate of Pacer Advisors, Inc.

BUL ETF issuer
BUL ETF official page

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FAQ

What is the BUL ETF?
The BUL ETF, also known as the Northern Trust Quality Dividend Defensive Index ETF, is an exchange-traded fund that aims to provide investors with exposure to U.S. domiciled large- and mid-capitalization companies with lower absolute volatility characteristics relative to the Northern Trust 1250 Index.
What is the underlying index that the BUL ETF aims to track?
The BUL ETF aims to track the performance of the Northern Trust Quality Dividend Defensive Index, which selects companies from the Northern Trust 1250 Index that exhibit financial strength, stability, and enhanced risk-return characteristics.
How does the BUL ETF achieve its investment objective?
The BUL ETF employs a passive or indexing approach, attempting to replicate the performance of the Northern Trust Quality Dividend Defensive Index through representative sampling. It invests in a sample of securities that collectively have a similar investment profile to the underlying index.
What types of companies are included in the BUL ETF?
The BUL ETF includes U.S. companies from various sectors that possess financial strength and stability, as well as enhanced risk-return characteristics. These companies typically exhibit lower overall absolute volatility relative to the broader market.
What are the characteristics of the Underlying Index that the BUL ETF seeks to emphasize?
The Underlying Index emphasizes factors such as management efficiency, profitability, and cash flow generation when selecting and weighting eligible securities. It aims to reduce overall portfolio volatility and maximize the quality factor compared to the Northern Trust 1250 Index.

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