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Research Firm: Ned Davis Research Group

  • Methodology Quantitative Model Driven
  • Approach Fundamental Analysis, Technical Analysis
  • Equity Style Top Down, Macro
  • Report Types Ratings, Reports, Expert Strategies, Mean Reversion and Cyclical Trading Pattern Charts

Ned Davis Research Group (NDRG) is one of the largest independent providers of comprehensive institutional research. NDRG is recognized for concise commentary and unbiased research that offers investors insight into the forces driving the markets, historical perspectives, and fusing various analytical techniques. NDRG's research is best described as having a disciplined yet flexible approach to help investors avoid major mistakes, let their profits run, and cut their losses when necessary.

Methodology

NDRG's ETF research was developed based on one of Ned Davis' main tenets of investment research, which is: "to rely on a tree of indicators rather than hanging on one branch." Because there are several factors that influence security pricing, we developed ETF-related indicators and models to provide an overall assessment of an ETF on both a relative and an absolute basis. Therefore, NDRG's ETF research can be used to help identify those ETFs that best suit an investor's needs.

The ETF research is not designed to generate absolute buy and sell recommendations for a particular ETF. The ETF research, which includes relative strength rankings, trend models, and ETF-related indicators, can be used by investors to narrow their ETF selection choices based on criteria that supports their investment philosophy. Whether used in conjunction with other research or as a stand-alone selection tool, a disciplined indicator/model approach in addition to sound risk control and money management can help reduce investor anxiety and enhance selection choices.

Rating: NDRG provides a variety of proprietary indicators developed to narrow ETF choices and selection. All indicators are converted simple average rating from one to five for easy interpretation, with one being the lowest score (bearish) and five being the highest score (bullish). The overall score for a fund should not be used as an indication to buy or sell a fund. Factors are designed to evaluate an ETF's relative strength versus other ETFs, its short- to intermediate-term price and breadth trend, its mean reversion potential, and its historic seasonality tendencies. In addition to factor analysis, capitalization and style attributes, as well as asset allocation within the ETF, are determined by the ETF holdings.

For more detailed information on factor scores, please refer to page 9 of the Guide to ETF Service.

Coverage

  • ETF Research is provided for ETFs traded within the United States
  • 3 years of data is required for factor analysis

What's Provided on Fidelity.com

  • ETF Research reports, updated daily, provide NDRG proprietary factor ratings, performance statistics, classification, and comparable ETFs. Domestic equity ETFs also include NDRG equity style profile, asset allocation, and 3-year median valuation statistics. View How to read NDRG ETF Reports (PDF) to learn more.
  • ETF Ratings: daily overall ETF rating is based on the simple average of the available factors for each ETF. The number of factors for each ETF will vary due to data or analysis requirements. The scores will range from one to five (1 to 5), with one being the lowest possible score and five being the highest or best possible score.
  • Mean Reversion Charts: daily mean reversion charts identify those ETFs that have reached overbought or oversold extremes. Scores for this indicator range from one to five (1 to 5), with five (5) identifying extreme oversold conditions, and one (1) identifying extreme overbought conditions. The scores are updated on a weekly basis. An overbought security describes a situation in which the price of a security has risen to such a degree, that an oscillator, in this example, a 252-day rate-of-change, has reached an extreme over the past 5-years. An oversold situation is the opposite condition where prices have fallen to extremes based on the same methodology.
  • Cyclical Trading Pattern Charts: monthly seasonal chart helps to identify longer-term seasonal patterns in an ETF. Using NDRG's advanced cycle construction utilities, a yearly cycle price line is constructed based on actual trading days. The bars for each month designate the percentage of months the ETF has closed with a positive gain for that particular month and the average gain for the month.
  • Predefined search strategies
  • NDRG also provides stock research ratings and reports.

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