This Fund Uses Data Science Techniques

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker, financial journalist, and money manager.

The iShares Evolved U.S. Media and Entertainment ETF (IEME) is an exchange-traded fund that uses data science techniques and a proprietary classification system to identify and select companies engaged in the media and entertainment sectors.

IEME’s selection process draws heavily on a methodology first pioneered by BlackRock and involves machine learning models that choose and weight sector stocks. The fund then searches annual report documents, looks for certain key words and then categorizes the company into one of many sectors. While a single stock can end up in more than one sector, the program compensates for this by reducing its weight in the portfolio. This approach also reduces the risk of suffering a financial setback if the value of a stock plummets unexpectedly.

It also is worth noting that this fund’s goal is not to attempt to “cherry-pick” winners through some sort of obscure methodological process. Rather, its goal is to simply expose investors to the wealth of entertainment firms that are out there to better equip them with the knowledge that is required to make good investments.

Most of IEME’s funds, 71.21%, are in entertainment companies such as Walt Disney (NYSE: DIS), Twenty-First Century Fox (NASDAQ: FOX), Comcast (NASDAQ: CMCSA), CBS (NYSE: CBS), Viacom Class B (NASDAQ: VIAB), Netflix (NASDAQ: NFLX) and Activision Blizzard Inc. (NASDAQ: ATVI).

This ETF also has funds invested in leisure products, hotels and entertainment, software and IT and telecommunications as well.

Chart courtesy of stockcharts.com

Here, it is worth issuing a word of caution as more than a few of these stocks (Netflix among them) were strongly affected during the recent stock market plunge and lost a sizable amount of their value. Given the still relatively volatile environment that is the technology sector, it remains to be seen if the recent plunge was the beginning or the end of a larger trading pattern.

Exclusive  Stocks close at new 2014 lows as Fed tapers again

The fund currently has $4,939,750 net assets, has an average daily trading volume of 3,335 shares and has an average spread of 0.31%. IEME also has an expense ratio of 0.18%, meaning that it is relatively cheap to hold in comparison to other exchange-traded funds.

In short, while IEME does have several advantages over some of its peer funds, its risks are far from zero. Interested investors always should do their due diligence and decide whether the fund is suitable for their portfolios.

I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Like This Article?
Now Get Jim's FREE Special Report:
The Top 11 Dividend ETFs to
Buy Right Now

Get up to 5X the yields of traditional income plays.

Get Access to the Report, 100% FREE


img
previous article

Paul Dykewicz explains the implications of the Ford-Volkswagen alliance in vehicle development and production.

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

LEARN MORE HERE

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

LEARN MORE HERE

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Mike Turner

Mike Turner’s financial, mathematical, computer science and engineering background serves as the foundation for his disciplined, rules-based approach to trading. Mike’s three services include:

Product Details

LEARN MORE HERE

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. Since 2010, Hilary's financial publications have provided stock analysis and investment advice to her subscribers:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE