Investing Smarter in a Shifting Tech World
As innovation and technological advancements continue to reshape industries and global economies, investors are seeking smarter ways to capture the next generation of market leaders.
With a growing emphasis on intangible investments, there has been a fundamental shift in how companies are investing in their future growth. In this Alger Recap, we explore our latest ETF launch and share insights from Alger Director of Market Strategy Brad Neuman, CFA . Learn how we identify tomorrow’s potential market leaders, today.
Capturing Market Disruptors with Alger’s New ETF
We started the new year off by announcing the launch of Alger Russell Innovation ETF (Ticker: INVN)! INVN is designed to track the most innovative companies in the Russell 1000 Index, prioritizing firms with high R&D spending relative to enterprise value.
The ETF is rebalanced quarterly, ensuring investors have exposure to businesses that are continually innovating and pushing technological boundaries. In collaboration with FTSE Russell, we developed the underlying index that will support and screen companies that meet our innovation criteria.
Speaking about INVN, Alger President and Chief Distribution Officer Christoph Hofmann, CFA notes:
“We continue to hear from clients that they are looking for differentiated investment opportunities, and we believe that the Alger Russell Innovation ETF is a unique way to address this growing demand.”
Is Innovation Undervalued???
In a recent Financial Advisor article, Brad highlights the rationale behind our approach, explaining that many traditional financial metrics fail to fully account for intangible assets. Currently, accounting practices obscure the value of innovation, often treating R&D as an expense, rather than leading to an asset.
By focusing on companies where R&D spending is high but may not yet be reflected in stock valuations, INVN aims to uncover potential growth opportunities that are often overlooked by conventional analysis.
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“I think it allows investors to find innovation potentially before the market does,” Brad says.
A Deep Dive Into Alger’s Latest ETF: INVN
INVN is a very different product for Alger. So, how exactly does this strategy work?
In a recent episode of The Alger Podcast, Brad joined podcast host Alex Bernstein to share the development and strategy behind Alger’s latest ETF.
Brad notes how outdated accounting methods can create a challenge for investors looking to identify high-potential companies. However, INVN solves this problem by using a top-down, rules-based approach to systematically highlight firms where we believe innovation is a core driver of value.
How exactly does the team isolate the top innovative companies on the Russell 1000? There are two pieces to the strategy, Brad says, with one step being to remove companies in the bottom third in terms of free cash flow relative to sales.?
Tune in to the full conversation on the Alger website to hear Brad break down the rest of the methodology and hear why he believes there’s no innovation strategy quite like the Alger Russell Innovation ETF.
Stay updated with the latest trends in technology and innovation by subscribing to The Alger Recap newsletter. For more market insights, follow Alger on LinkedIn and Instagram, and Alger CEO and CIO Dan Chung on LinkedIn.