FLDZ PM Commentary – 2023 Q4

RiverNorth Patriot ETF (BATS: FLDZ) reported a net total return on market price of 12.16% for the year vs. 25.70% for the S&P 900 Index during the same period. Historical performance is below:

  3 Month 6 Month 1 Year Since Inception
RiverNorth Patriot ETF 10.72% 7.50% 12.16% -0.60%
S&P 900 Index Total Return 11.69% 7.98% 25.70% 1.63%
Fund inception is December 31, 2021. Performance figures for periods greater than 1 Year are annualized.

Performance data quoted represents past performance, which is not a guarantee of future results. Current performance may be lower or higher than the performance quoted. The principal value and investment return of an investment will fluctuate so that your shares may be worth more or less than their original cost. You can obtain performance data current to the most recent month end by calling 877.774.8783 or clicking here. Total return measures net investment income and capital gain or loss from portfolio investments. All performance shown assumes reinvestment of dividends and capital gains distributions.

We are proud to announce that in 2023, we again gave more than 100% of our sub-advisory fee to the Folds of Honor, a charitable organization that provides educational scholarships to the families of military service men and women and first responders killed or disabled while serving and defending our great nation. Rated 4/4 by Charity Navigator, the Folds of Honor received a perfect Accountability & Finance score for 2022 and reports that 91% of donated funds go directly to scholarships.

RiverNorth Capital Management’s Chief Executive and Chief Investment Officer, Patrick Galley, was first introduced to the Folds of Honor upon visiting its headquarters at the Patriot Golf Club near Tulsa, Oklahoma. At the Club, Taps is played each day at 1300 hours followed by 13 chimes of the bell, all in deference to the 13 folds of Old Glory. At this emotional moment, ALL activity stops to give honor to our fallen heroes. Experiencing first-hand the dedication and clarity of vision that the leadership team at Folds of Honor has for its mission and hearing of their vow to leave no family behind, Patrick was deeply moved. His response to their call to action was the creation of the RiverNorth Patriot ETF, a first of its kind, non-profit impact ETF.

Since its inception on December 31, 2021, FLDZ has consistently delivered to its investors a core portfolio of U.S.-based companies that are principally traded here and also generate at least 90% of their revenues within our borders. To focus on the subset of more developed and liquid American companies, we screen out those with market capitalizations of less than $5 billion. The Fund’s strategy allows for investors to not only provide a critical cause with the funds it needs but to also invest in all-American companies and add diversity to their equity portfolios.

Due to the Fund’s mandate, there are some portfolio characteristics that make FLDZ rather unique in today’s marketplace. First, FLDZ maintains an estimated 99.3% revenue exposure to the United States. This compares with an estimated 51.0% U.S. revenue exposure in the S&P 900 Index, the Fund’s benchmark, for an active exposure of 48.3%. Second, FLDZ has sector allocations that differ from the S&P 900 Index’s exposures due to the portfolio constraints mentioned in the paragraph above. Examples of these sector exposure differences include the Fund’s relative underweight to Technology and Healthcare sectors, and overweight to Finance, Energy and Utilities sectors.

The allocation in the Fund away from Technology and into other sectors is primarily a result of the large companies within this sector that have relatively low revenue exposure to the United States. This is demonstrated by the U.S. revenue exposures of each of the top 10 constituents in S&P 900 Index, where Technology companies are highlighted:

S&P 900 Index Top 10 Constituents
Ticker Name % Revenue from USA
AAPL Apple Inc. 36.2%
MSFT Microsoft Corporation 50.4%
AMZN, Inc. 69.3%
NVDA Nvidia Corporation 30.7%
GOOGL Alphabet, Inc. A 47.7%
META Meta Platforms, Inc. 40.5%
GOOG Alphabet, Inc. C 47.7%
TSLA Tesla, Inc. 49.8%
BRK.B Berkshire Hathaway B 84.0%
JPM JP Morgan Chase & Co. 75.2%
Source: 12.29.2023 S&P 900 Index fact sheet, FactSet

Below are the Fund’s estimated top-level characteristics vs. the S&P 900 Index, as of December 31, 2023. Here we can see the Fund’s higher dividend yield, lower price-to-book, and lower price-to-earnings ratios vs. the benchmark. We view these differences as indicators of the Fund’s slight tilt to value stocks. As we mentioned in our last letter, we believe the portfolio’s incremental tilt toward the value factor will likely reduce risk to the portfolio should a U.S. recession occur. Furthering the notion that the portfolio is somewhat defensive, it maintains an equal-weight tilt in its allocation. In practice, this means that we weight all stocks within a given sector the same. We believe that this provides investors with an additional layer of risk mitigation by diversifying away the idiosyncratic risks associated with concentrating exposure in any one company.

Characteristics FLDZ S&P 900
Number of securities 296 904
Weighted average market cap ($M) 26,241 678,601
Median market cap ($M) 12,070 13,246
Fundamental (%) (%)
Weighted average dividend yield 2.4 1.5
Price/earnings 14.3 23.6
Estimated 3–5-year EPS growth 7.8 13.0
Price/cash flow 8.2 14.8
Price/book 2.4 4.1
Price/sales 1.3 2.6
ROE (Return on Equity) 18.2 23.3
Source: RiverNorth, FactSet Figures are estimates and are subject to change. Please see definitions on the next page.

Turning to FLDZ performance for the year, sectors where the Fund saw the largest positive performance relative to the benchmark include Healthcare, Non-Energy Materials, and Industrials sectors. On the other hand, Technology, Utilities, Finance and Energy sectors were the largest detractors from relative performance.

Notably, the aforementioned underweight to the Technology sector detracted materially from performance relative to the benchmark as mega-cap tech companies rallied to nosebleed levels in 2023, leaving most other stocks in their dust. Frequently referred to in the press as the “Magnificent 7”, this handful of stocks was responsible for much of the S&P 900 Index’s strong relative performance for the year. This becomes particularly obvious when reviewing the changes in Index composition throughout the year: The “Magnificent 7” have grown from an estimated 19.1% of the Index at the end of last year to an estimated 26.5% of the Index at the end of this year – a 7.5% increase in a zero-sum game where there are 897 other stocks in the Index, at present.

Looking back on 2023 through a macro lens, markets saw inflation pressures begin to subside, interest rates peak and then start to move back in toward the end of the year, and general indications that the broader economic picture was finally beginning to stabilize. This was not without serious turbulence though as we saw the war continue to burn hot in Eastern Europe, a new geopolitical conflict take shape in the Middle East, and a banking crisis nearly ignite a panic when it resulted in the second-largest bank failure in U.S. history.

As always, we don’t know what the future has in store for us or our Great Nation. That said, we are hopeful that 2024 will be a strong year for our mission to fund scholarships and generate positive returns for our shareholders. RiverNorth and the Folds of Honor continue to appreciate your investment in our effort to give back to those that have given us everything. We encourage you to share the message of hope and opportunity that the Folds of Honor organization has brought to us and wish you a wonderful year ahead.


S&P 900 Index: S&P U.S. indices are designed to reflect the U.S. equity markets and, through the markets, the U.S. economy. The S&P 900 combines the S&P 500 and the S&P MidCap 400 to form a benchmark for the mid- to large- cap segment of the U.S. equity market. It is not possible to invest directly in an index.

30 day SEC yield: A calculation based on a 30-day period ending on the last of the month. It is computed by dividing the net investment income per share earned during the period by the maximum offering price per share on the last day of the period.

Weighted average dividend yield: Weighted average of all portfolio constituent dividend yield ratios based on each constituent’s weight in the portfolio.

Dividend Yield = Divi/Pi
Divi := Annual dividends per share (DPS) for security i as of the report date Pi := Closing price of security i as of the report date

Price/earnings: Weighted average of all portfolio constituent price to earnings ratios based on each constituent’s weight in the portfolio.

Price to Earnings = Pi/EPSi
Pi := Price for security i as of the report date
EPSi := Last 12 months EPS of security i as of the report date

Estimated 3–5-year EPS growth: Weighted average of all portfolio constituent estimated 3–5-year EPS growth rates based on each constituent’s weight in the portfolio. FactSet, First Call, I/B/E/S Consensus, and Reuters provide FactSet with a pre-calculated mean long-term EPS growth rate estimate, which is calculated using each individual broker’s methodology.

Price/cash flow: Weighted average of all portfolio constituent price to cash flow ratios based on each constituent’s weight in the portfolio.

Price to Cash Flow = Pi/CFi
Pi := Price for security i as of the report date
CFi := Cash flow per share of security i as of the report date

Price/book: Weighted average of all portfolio constituent price to book ratios based on each constituent’s weight in the portfolio.

Price to Book Value = Pi/BVi
Pi := Price for security i as of the report date
BVi := Book value per share of security i as of the report date

Price/sales: Weighted average of all portfolio constituent price to sales ratios based on each constituent’s weight in the portfolio.

Price to Sales = Pi/Salesi
Pi := Price for security i as of the report date
Salesi := Sales per share for security i as of the report date

ROE (Return on Equity): Weighted average of all portfolio constituent return on equity figures based on each constituent’s weight in the portfolio.

Return on Equity (ROE) = NIi/TEi
NIi := Net income of security i as of the report date TEi := Total equity of security i as of the report date

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Before investing you should carefully consider the Fund’s investment objectives, risks, charges, and expenses. This and other information is in the prospectus. This material must be preceded or accompanied by a prospectus. Please read the prospectus carefully before you invest. You can access the prospectus by clicking here, (

The Fund may not achieve its objective and/or you could lose money on your investment in the Fund. The Fund is recently organized with no operating history for prospective investors to base their investment decision which may increase risks. Some of the Fund’s key risks include but are not limited to the following risks. Please see the Fund’s prospectus for further information on these and other risk considerations.

ETF Risks. As an ETF, the Fund is exposed to the additional risks, including: (1) concentration risk associated with Authorized Participants, market makers, and liquidity providers; (2) costs risks associated with the frequent buying or selling of Fund shares; (3) market prices may differ than the Fund’s net asset value; and (4) liquidity risk due to a potential lack of trading volume.

The TrueShares RiverNorth Patriot ETF is also subject to the following risks: Equity Market Risk – securities held in the Fund’s portfolio may experience sudden, unpredictable drops in value or long periods of decline in value. Market Events Risk – markets have experienced significant periods of volatility in recent years due to a number of economic, political and global macro factors, including the impact of the coronavirus (COVID-19) pandemic and related public health issues, growing concerns and uncertainties regarding interest rates, trade tensions and the threat of tariffs resulting in volatility and negative impacts on asset prices, liquidity of certain securities and normal operations of the securities markets. New Fund Risk – The Fund is a recently organized investment company with no operating history. Other Potential Risks – The Fund may invest in “when-issued” securities; preferred stocks; rights/warrants; tracking stocks; investment company securities/pooled investments; REITs; and repurchase agreements.

An investment in True-Shares is subject to numerous risks, including possible loss of principal. The ETFs are subject to the following principal risks: Authorized Participants, Market Makers, and Liquidity Providers Concentration Risk associated with ETFs; Equity Market Risk; Management Risk; Market Capitalization Risk (Large Cap; Mid Cap, Small Cap Stock); Market Risk; New Fund Risk; and Cyber Security Risk.

The ETF is benchmark agnostic and corresponding portfolios may have significant non-correlation to any index. Foreside Fund Services LLC, distributor.