How This ETF Added Uber 12 Months Before the S&P 500
TRFM hasn't been short of accolades, not only just year-to-date, but over the life cycle of the product's inception. So, TRFM's been around for close to three years now, and it's not only outperforming the NASDAQ 100 year to date, it's actually been outperforming the S&P 500 since its inception. And it's actually in the top quartile amongst its immediate peer group over the past three years. So, we're really happy with TRFM's performance.
Just to take a step back as to what TRFM is, this is a rules-based global thematic ETF, and it tracks the Pence transformers index, an index that selects its underlying constituents based on research and development expenditures and sales growth in order to really get exposure to really fast-growing companies and those companies that could even potentially be acquired down the line by such larger companies. So, in terms of its overall performance and what's been driving that, one key thing to keep in mind with the RFM is its ability to manage risk in a riskier area of the market.
Thematic strategies overall tend to lean towards mid- to small-cap growth areas of the style box, but TRFM is a multi-theme solution. So we're not taking one single theme bet. It has a constituent count of roughly 200 stocks, which are modified equal weighted. No stock tends to hold above 2% as far as the overall portfolio upon its quarterly rebalance.
What we really like about TRFM is how that all pans out as far as its final portfolio because less than 10% of the portfolio were in the magnificent seven cohort of stocks. So think of your Teslas, Microsofts of the world, they're in the portfolio, but as far as their weighting in the overall portfolio, they tend to be lesser of that overall portfolio mix. TRFM's value add recently has actually been found in its international bucket in recent months.
Key themes like global defense, China, China internet have been some top contributing areas of the market that have been key to TRFM's recent performance. But TRFM and what we like about their strategy is its ability to potentially add lesser-known names before they end up getting added to the overall larger benchmark. So I wouldn't call this a lesser-known name, but definitely a good example. We have Uber, for example. So Uber was actually added to TRFM's tracking index 12 months before the S&P 500 added it. Stock price appreciated close to 100% during that time period. It's not going to work out all the time, but we think that that's a good example of what TRFM could potentially bring to the table as far as portfolio application goes.
