In a recent episode of “Behind the Ticker,” Will Rhind, founder and CEO of GraniteShares, discussed the innovative approach behind the GraniteShares NASDAQ Select Disruptors ETF, ticker DRUP. GraniteShares, an ETF issuer with around $8 billion in assets under management, offers a diverse range of ETFs including physical gold, income strategies, broad equity strategies, and leveraged and inverse ETFs on single stocks like Tesla and Nvidia. DRUP focuses on capturing the top 50 most disruptive equities in the U.S. market, identified through a unique methodology developed in partnership with NASDAQ.
Rhind explains that the concept of “disruption” is integral to DRUP’s strategy. Disruption is measured through various factors including the value of a company’s patent portfolio, the amount of money spent on R&D, and gross margins. Companies from the NASDAQ are scored and ranked based on these factors, with the top 50 making it into the portfolio. This approach ensures that the ETF includes companies at different stages of disruption, from infancy to maturity, thereby capturing a broad spectrum of innovative firms.
One of the standout features of DRUP is its focus on quality alongside disruption. By incorporating factors like gross margins and margin growth, the ETF aims to include not just disruptive companies, but also those with a sustainable competitive advantage or “moat.” This ensures that the portfolio includes companies that are not only innovative but also financially robust. An example Rhind mentions is the inclusion of companies with high-value patent portfolios, which typically indicate a strong competitive edge in their respective fields.
Rhind also highlights the fund’s quarterly rebalancing and its adjusted free float market cap weighting, which prevents any single company from dominating the portfolio. Interestingly, despite the absence of several “MAG7” stocks like Nvidia, Tesla, Apple, and Amazon, DRUP has achieved impressive performance. This underscores the effectiveness of its unique methodology, which selects companies based on their disruption potential rather than their current market popularity.
In terms of positioning within a diversified portfolio, Rhind suggests that DRUP can replace technology or innovation sleeves that advisors might already hold, such as QQQ. It can also serve as a replacement for other thematic or innovation-based strategies, offering a fresh and robust approach to innovation investing. GraniteShares markets DRUP as a unique, methodology-driven ETF that offers a better way to invest in innovation, emphasizing its differentiated approach and strong performance.
For more information about GraniteShares and the DRUP ETF, investors can visit GraniteShares.com, where they can find detailed information about the funds, contact options, and additional resources. GraniteShares is also active on social media platforms like LinkedIn and Twitter, providing regular updates and insights into their range of investment products.