CFRA made significant enhancements and updates to its exchange-traded fund rating system as part of a new approach that the firm said Monday “blends CFRA’s proprietary forensic and fundamental approaches.”
That new approach includes forensic earnings quality scores and a Stock Appreciation Ranking System that it said “offer a proven approach to equities analysis.”
The ratings will be updated each month using a machine-learning model with the “goal of identifying the funds with highest probability of outperformance of its equity or fixed income asset type,” CFRA said.
The new rating system “more closely aligns” the firm’s stock and mutual fund research, it said. Its machine learning techniques, meanwhile, “enable users to identify those ETFs with consistent records of outperformance in both up and down markets,” CFRA said.
The data used to power CFRA’s ETF rating methodology was “built upon proprietary content” from CFRA’s acquisition of First Bridge Data in August 2019, CFRA said. With “integration now complete, clients can access the industry’s most comprehensive database of ETF constituent holdings data, reference and classification data, investment analytics, and daily pricing, flows and statistics,” it said.
Prior to the First Bridge purchase, CFRA in October 2016 acquired and has since fully integrated the Equity and Fund Research business from S&P Global, it noted.
“For the past decade, CFRA has provided a unique, forward-looking, holdings-based approach to researching and rating ETFs and we’re now able to dig even deeper on behalf of our clients,” according to Todd Rosenbluth, head of ETF and mutual fund research for CFRA.
“We will continue to include fund-specific characteristics and forward-looking metrics in the assessments of all 1,800 ETFs under our watch, including expense ratios and other costs, and we will also continue to rate ETFs within just a few months of its history,” he said in a statement.