Using Forward Looking Fundamentals to Help Minimize Risk

When we read the fine print, we often see statements like “past performance is not an indicator of future results.” But the truth of that statement is rarely internalized when it comes time for investors to choose their investments. We believe basing investment decisions on historical data like 1-year performance numbers or year-to-date earnings does little to actually set a portfolio up for success in future financial climates. The past does indeed inform decision-making for the future, but should be done in a way that encourages adaptation and avoids repeating mistakes. To minimize real risk of long-term investments and achieve capital appreciation, we think investors should use fundamentals to look forward instead of investing in stocks solely because of strong past results. 

Fundamental analysis requires significant time, expertise, and dedication to vet each company. It is antithetical to the traditional strategy of including the top performers in a portfolio with the hope that including all of the big names will still result in strong overall performance even if a few of them tank. Instead of merely grabbing the top 50 names based on past performance, we believe using forward-looking fundamentals to craft a concentrated portfolio is more intentional and can help to provide a long-term investment strategy without sacrificing security.

Let’s take a look at American Electric Power Company (AEP)*, one of the holdings in TrueShares’ Low Volatility Equity Income ETF (DIVZ). In general, utility companies provide an essential economic service that makes them relatively recession-proof. AEP in particular has a large market capitalization with five million retail customers in 11 states and has been reliably providing dividends for over a century1. Most importantly, AEP has a diversified asset class including coal, natural gas, renewables, and nuclear. Its diversified asset classes in and of themselves can help to provide risk mitigation for the portfolio, but also position AEP positively in the economy of the future as demand for electricity is expected to triple by 20502, with renewables making up a majority of the growth.

Only through fundamental analysis is a portfolio manager positioned to back up an investment in AEP as the economy moves toward clean energy, despite its current coal capacity of 43% 3. AEP is putting the resources and leadership in place to ramp up its focus on renewables as economic opportunities shift4. Looking ahead, we believe the prospect of a recession, or at least a continued bearish market, positions this defensive stock that has potential to outperform the market as an attractive long-term investment. Investing in AEP is a forward-looking investment decision made possible by digging into its business practices and management decisions.

Another similarly-vetted company in our DIVZ ETF is UnitedHealth Group (UNH)*. We believe UNH can help to provide risk mitigation by serving members inside and outside of the U.S., generating significant free cash flow5, and providing a variety of products and services from health maintenance organizations (HMOs) and point of service plans (POS) to preferred provider organizations (PPOs) and managed fee-for-service programs. Looking forward, UNH has a projected earnings growth rate of 13% 5 in FY 2023. In our DIVZ ETF, AEP and UNH are accompanied by fewer than 30 other companies that have all received the same level of scrutiny with an eye toward future performance. The portfolio as a whole is diversified in its business exposure, sector representation, and relative secularity, seeking to provide such a concentrated portfolio below-average volatility with above-average dividend yields.

* For a full list of holdings, please visit

Diversification does not ensure profits or prevent losses. Dividends are not guaranteed and may fluctuate. Forecasts are inherently limited and should not be relied upon when making investment decisions. There is no guarantee the sector will experience project growth. In addition, there is no guarantee it will translate to positive fund performance.


1 –
2 –
3 – As of 09/30/2022.
4 –
5 –


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.

Dividend Paying Security Risk. Securities that pay high dividends as a group can fall out of favor with the market, causing these companies to underperform companies that do not pay high dividends. Dividends may also be reduced or discontinued. Equity Market Risk. Common stocks are susceptible to general stock market fluctuations and to volatile increases and decreases in value as market confidence in and perceptions of their issuers change based on various and unpredictable factors including but not limited to: expectations regarding government, economic, monetary and fiscal policies; inflation and interest rates; economic expansion or contraction; and global or regional political, economic and banking crises. Market Capitalization Risk. The Fund may invest is securities across all market cap ranges. The securities of large-capitalization companies may be relatively mature compared to smaller companies and therefore subject to slower growth during times of economic expansion and may also be unable to respond quickly to new competitive challenges, such as changes in technology and consumer tastes. The securities of mid-capitalization companies may be more vulnerable to adverse issuer, market, political, or economic developments than securities of large-capitalization companies and generally trade in lower volumes and are subject to greater and more unpredictable price changes than large capitalization stocks. The securities of small-capitalization companies may be more vulnerable to adverse issuer, market, political, or economic developments than securities of large- or mid-capitalization companies and generally trade in lower volumes and are subject to greater and more unpredictable price changes than large- or mid-capitalization stocks. Depositary Receipts Risk. American Depositary Receipts (“ADRs”) have risks similar to those of foreign securities (political and economic conditions, changes in the exchange rates, etc.) and entitle the holder to all dividends and capital gains that are paid out on the underlying foreign shares.

Before investing, carefully consider the TrueShares ETFs investment objectives, risks, charges and expenses. Specific information about TrueShares is contained in the prospectus and a summary prospectus, copies of which may be obtained by visiting Read the prospectus carefully before you invest. Foreside Fund Services, LLC.