'Flagging' an ETF During America's Holiday Week

The forensic accounting long-short ETF, known by its ticker 'flag', uses forensic accounting to evaluate 500 large-cap stocks, identifying companies with potential accounting or performance issues. Initially a long-only fund, it transitioned to a long-short strategy in August 2015, with a 30% short and 130% long allocation. The fund manages over $20 million in assets with around 140 holdings, including long positions in Macy's, Marathon Oil, and Ralph Lauren, and short positions in Shinner Energy, E-Trade, and Caesars. Despite its innovative approach, the fund has an expense ratio of 100.61 basis points and has underperformed the broader market since its 2013 launch. It receives a yellow light in the Bloomberg Intelligence Traffic Light system due to its alternative weighting and potential hidden costs from shorting.

What is the primary focus of the FLAG ETF?

• Investing in small-cap stocks

• Investing in international markets

• Applying forensic accounting to evaluate large-cap stocks

• Focusing on technology sector investments

When did FLAG ETF change to a long-short strategy?

• In 2015

• In 2019

• In 2013

• In 2017

What is the allocation strategy of FLAG ETF?

• 50% short and 50% long

• 70% short and 30% long

• 30% short and 130% long

• 100% long

Which of the following companies is NOT mentioned as a long position in FLAG ETF?

• Macy's

• Marathon Oil

• Ralph Lauren

• Caesars

What is a significant drawback of the FLAG ETF's strategy?

• High expense ratio

• Limited number of holdings

• Focus on small-cap stocks

• Lack of international exposure