FAQ

Frequently Asked Questions:

Put simply, the index should be considered the recipe of the ETF. This means that the index is the investment methodology by which the issuer of the Exchange Traded Fund (ETF) should follow when they are investing on behalf of the owners of the ETF. Any deviation from this recipe causes what is known as tracking error.

Obviously all investors are responsible doing their own due diligence. The group is historically viewed as a consumer discretionary and sometimes as a consumer staple. Given the growth of the industry investors could also use the ETF as a growth allocation. Investors should be aware that about 70 percent of the weighting of the index is considered small-mid caps and thus should be expected to carry similar portfolio risk.

INDXX played a role in the design and back test of the index and is responsible for the calculation, dissemination and administration of the index. See below Partners sections.

  1. The definition is still evolving. Beta typically refers to volatility. The index construction for the Restaurant Leaders INDXX index is considered smart beta because it is not market cap weighted which is the basis behind traditional index methodology. A narrowly defined sector can have more BETA and volatility than broad based allocations.

Tracking error is when the performance number of the ETF and Index are different. Causes of tracking error include, the fee that the ETF issuer charges, timing of corporate actions, portfolio rebalancing and some frictional costs associated with the create and redeem process. Tracking error is normally very low, but not something that can be guaranteed.

There are about 65 companies that are publicly traded in the United States that would be considered for the index. The index committee determines what companies qualify for the index. Not all food service companies are considered pure play restaurant companies. Examples of two qualifying roles that make a pure play are a customer interfacing roles and sit down tables. Companies are also required to trade for a minimum of 200 days in order to be considered for the index.

The term rebalance refers to the reweighting of the index construction. Rebalancing is similar to a recipe as it operates according to a specific procedure. When an index is rebalanced the ETF that tracks the index must follow the procedure or the result is tracking error. MENU is rebalanced quarterly

Consumer discretionary goods include durable goods, apparel, entertainment and leisure, and automobiles. The purchase of consumer discretionary goods is also influenced by the state of the economy, which can affect consumer confidence.

  1. Many of the companies in the index have large global brands and operations. The U.S. focus was derived for purposes of liquidity and to maintain consistency to the investment process.

USCF has licensed the index from AETFS, the owner of the Restaurant Leaders INDXX Index. There is no affiliation between USCF and AETFS.

ETFs are available in most developed nations. In the U.S., anyone who can open a brokerage account and buy stocks will be able to buy an ETF.