CSD offers niche equity exposure to spin-offs. The idea: A firm spun off from a larger parent has a singular focus on its core business, rather than being a rudderless component of a larger whole. Its S&P index uses a 4-year look back, and names can be added immediately once the monthly reconstitution rolls around. Single-name exposure can be concentrated up to 7% at rebalance. CSD pulls from a broad US index (not from the S&P 500) but screens out smaller firms with a minimum $1B market-cap screen. It applies no additional selection screens, however, thus offering reasonably pure-play exposure to its narrow thesis. Note: Prior to May 20, 2016, CSD tracked the Beacon Spin-off Index, which used different time horizons and had a growth-oriented multi-factor selection process. The change was material but the spin-off thesis remains the same.
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