What Makes a Stock "Best of Breed" for BOBP's Index?
Screen. Score. Select. Repeat.
In a market saturated with stock selection strategies, what does it take to identify the optimal securities? For CORE16, the answer lies in a disciplined, data-driven process that identifies U.S. large-cap companies with the highest potential for near- to medium-term capital appreciation—while actively seeking to manage downside risk.
The CORE 16 Best of Breed Premier Index ETF (BOBP) tracks the Core16 Best of Breed Premier Index that seeks to do just that. Built on CORE16’s proprietary algorithm, the index simplifies stock selection by blending fundamental, factor-based, and risk-managed screens to systematically target opportunity while attempting to mitigate volatility.
Step 1: Define the Universe
BOBP’s index process begins with a clearly defined starting point: U.S.-listed large-cap securities with a market capitalization of at least $5 billion. This universe ensures the stocks included in the strategy are well-established and liquid.
Step 2: Screen for High-Potential Candidates
Using a proprietary screening model, CORE16 narrows the list to stocks that demonstrate strong fundamental and quantitative characteristics. Key criteria include:
- Momentum and recent performance trends
- Earnings quality and consistency
- Cash flow strength
- Attractive valuation metrics
- Positive return asymmetry (skewness)*
Stocks with positive skewness—those that show a higher probability of significant upside—are favored. This may help BOBP avoid stocks with disproportionate downside risk.
Each stock is measured using a rules-based scoring system that objectively evaluates these characteristics. The result is a quantifiable view of which stocks may demonstrate the strongest combination of growth potential and financial resilience.
Step 3: Rank and Select
After scoring, each stock is ranked, and the top 50 names are selected to comprise the index. This process ensures only the highest-ranking opportunities—based on the full spectrum of factor inputs—are included. Importantly, the index is rebalanced bi-weekly, allowing the strategy to remain potentially aligned with changing market conditions.
Step 4: Apply Risk Management and Cash Allocation
While the ETF remains fully passive, the underlying index it tracks includes a systematic risk overlay. When broader market signals indicate heightened risk, the strategy allocates a portion of the portfolio to cash equivalents. Typically, the fund holds around 10% cash in stable market conditions and may increase to about 20% when the market gets volatile. This rules-based adjustment may help to mitigate drawdowns* without requiring active management decisions.
Why It Matters
BOBP’s index seeks to offer a transparent, repeatable, and systematic approach to stock selection—built to adapt in real time and aims to capture upside while managing risk. By rebalancing and leveraging a multi-layered screening process, it aims to provide investors with a refined, high-conviction large-cap portfolio.
In short, BOBP aims to deliver the kind of precision and discipline often missing from traditional index strategies—without adding complexity for investors.
Click to meet the current stable of “BOBP” holdings here.
*Drawdown: A drawdown measures the percentage drop from an investment’s peak to its trough, helping assess risk, compare funds, or track portfolio performance
Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the Fund, please call 1-833-462-3466 or visit our website at www.core16etf.com. Read the prospectus or summary prospectus carefully before investing.
The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.
Diversification does not ensure a profit and cannot protect against losses in a declining market.
Indexes are unmanaged, do not incur management fees, costs and expenses, and cannot be invested in directly.
Asset allocation strategies do not ensure a profit and do not protect against losses in declining markets.
Investment returns will fluctuate and are subject to market volatility, so that an investor’s shares, when redeemed or sold, may be worth more or less than their original cost. Shares of ETFs are bought and sold at market price (closing price) not net asset value (NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns.
Exchange Traded Concepts, LLC serves as the investment advisor of the fund. SEI Investments Distribution Co. (SIDCO, 1 Freedom Valley Drive, Oaks, PA 19456) serves as the distributor for the BOBP ETF, which is not affiliated with Exchange Traded Concepts, LLC, or any of its affiliates.
Risk Disclosures:
Investing involves risk, including possible loss of principal. The fund is subject to risks including, but not limited to, passive investment risk, index tracking risk, authorized participant concentration risk, cybersecurity risk, equity investing risk, and large-capitalization risk. The Fund will be concentrated in an industry or a group of industries. This may subject the Fund to greater market risk than a fund that is more broadly diversified. BOBP is non-diversified. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the FDIC or any government agency.
The Core16 Best of Breed Premier Index (the “Index”) is a systematically constructed, rules-based index designed to measure the performance of 50 securities selected from the U.S. large-cap universe using Core16’s proprietary algorithm. The Index dynamically adjusts its selection logic based on market signals, adapting the type of securities it includes according to prevailing market conditions. It also maintains a flexible allocation between selected securities and cash to enhance risk-adjusted returns. The Index serves as a benchmark for a passively managed Exchange-Traded Fund (ETF).
