Guggenheim Partners, a diversified financial services firm, has launched three Transparent Value mutual funds. The funds are based upon the Dow Jones RBP family of directional indexes, and the components of each index are determined using required business performance (RBP) methodology.
The newly launched funds are Transparent Value Dow Jones RBP US large-cap aggressive index fund, Transparent Value Dow Jones RBP US large-cap defensive index fund and Transparent Value Dow Jones RBP US large-cap market index fund.
Developed by Transparent Value, RBP measures the company business performance that is implied in the price of a stock. Once the RBP has been calculated, a probability is assigned as to the likelihood that the management of a given company can deliver that RBP. The funds use a management strategy designed to track the total return performance of their respective Dow Jones Index.
Scott Minerd, chief investment officer of Guggenheim Partners, said: “The construction of these funds is based on what we consider to be the next generation of index design and represents a new valuation methodology for stocks.
“The innovation of the RBP methodology is entirely consistent with Guggenheim’s philosophy of constantly looking beyond the conventional way of investing and finding new ways to add value for our clients. We believe Transparent Value’s unique approach is attractive to investors.”
Julian Koski, co-founder of Transparent Value, said: “The RBP methodology is based upon a very simple investment question: Can management deliver the required business performance to support the price of the stock? If so, then it’s worth the investment. In short, we strive to minimize risk by investing in companies where management has a high probability of delivering the required business performance.
“RBP tells us the revenue required at the most granular level, such as how many iPods Apple has to sell, or how many stores Starbucks has to open, or how many packages FedEx has to ship to support the price of its stock.”