ALPHA ARCHITECT
INTERNATIONAL QUANTITATIVE MOMENTUM ETF
SUMMARY PROSPECTUS
FEBRUARY 4, 2020
ALPHA ARCHITECT
INTERNATIONAL QUANTITATIVE MOMENTUM ETF
(IMOM) Cboe
BZX Exchange, Inc.
Beginning January 1, 2021, the Alpha
Architect International Quantitative Momentum ETF (the “Fund”) intends to meet its shareholder report delivery obligations
by posting annual and semi-annual shareholder reports to the Fund’s website, www.alphaarchitect.com. Shareholders who
wish to continue to receive paper copies of the Fund's annual and semi-annual shareholder reports should contact the Fund at 215-882-9983
or by sending an e-mail request to ir@alphaarchitect.com or contact their financial intermediaries.
If you already elected to receive
shareholder reports electronically, you will not be affected by this change and you need not take any action. Please contact your
financial intermediary to elect to receive shareholder reports and other Fund communications electronically.
You may elect to receive all future
Fund reports in paper free of charge. Please contact your financial intermediary to inform them that you wish to continue receiving
paper copies of Fund shareholder reports and for details about whether your election to receive reports in paper will apply to
all funds held with your financial intermediary.
Before you invest, you may want to
review the Prospectus, which contains more information about the Fund and its risks. You can find the Fund’s Prospectus,
reports to shareholders, and other information about the Fund, including the Fund’s Statement of Additional Information,
online at www.alphaarchitect.com. You can also get this information at no cost by calling 215-882-9983 or by sending an
e-mail request to ir@alphaarchitect.com. The current Prospectus and Statement of Additional Information dated February 4, 2020
are incorporated by reference into this Summary Prospectus.
Investment
Objective
The Alpha Architect International
Quantitative Momentum ETF (the “Fund”) seeks to track the total return performance, before fees and expenses, of the
Alpha Architect International Quantitative Momentum Index (the “Index”).
Fees
And Expenses
This table describes the fees and
expenses that you may pay if you buy and hold shares of the Fund (“Shares”). The fees and expenses are expressed as
a percentage of the Fund’s average daily net assets. You may also pay brokerage commissions on the purchase and sale of
Shares, which are not reflected in the table.
Annual
Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fee1
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0.59%
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Distribution and/or Service (12b-1) Fees
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0.00%
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Other Expenses
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0.00%
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Total Annual Fund Operating Expenses
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0.59%
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1
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Total
Annual Fund Operating Expenses do not correspond to the Financial Highlights Ratios to
Average Net Assets, Net Expenses or Total Expenses due to the Management Fee reduction
effective January 31, 2019. The expenses shown above have been restated to reflect the
reduced Management Fee rate.
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Example
The following example is intended
to help you compare the cost of investing in the Fund with the cost of investing in other funds. The example assumes that you
invest $10,000 for the time periods indicated and then redeem all of your Shares at the end of those periods. The example also
assumes that the Fund provides a return of 5% a year and that operating expenses remain the same. You may also pay brokerage commissions
on the purchase and sale of Shares, which are not reflected in the example. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
One
Year:
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Three
Years:
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Five
Years:
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10
Years
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$60
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$189
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$329
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$738
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Portfolio
Turnover
The Fund may pay transaction costs,
including commissions when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover
rate may indicate higher transaction costs and may result in higher taxes when Shares are held in a taxable account. These costs,
which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. For the fiscal
year ended September 30, 2019, the Fund’s portfolio turnover rate was 135% of the average value of its portfolio.
Principal
Investment Strategies
The Fund employs a “passive
management” (or indexing) investment approach designed to track the performance, before fees and expenses, of the Index.
The Index is based on a proprietary methodology developed by Empirical Finance, LLC, d/b/a
Alpha Architect, and licensed to Empowered Funds, LLC, the Fund’s investment adviser (the “Adviser”) and a wholly-owned
subsidiary of Alpha Architect.
The Index
The Index uses a 5-step, quantitative,
rules-based methodology to identify a portfolio of approximately 40-50 non-U.S. equity securities or their depositary receipts
with positive momentum, as described below. A “momentum” style of investing emphasizes investing in securities that
have had higher recent total return performance compared to other securities.
The Index
Universe
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Construction
of the Index begins with the universe of stocks that principally trade on developed non-U.S. markets securities exchanges
in countries included in the MSCI EAFE Index. The universe of stocks is screened to eliminate all stocks whose market capitalization
is below the 40th percentile of the market capitalization of companies listed on the New York Stock Exchange (“NYSE”)
(approximately $2 billion as of December 31, 2019). Additionally, securities structured as real estate investment trusts
or exchange-traded funds (“ETFs”) are eliminated from the Index. Companies with less than 12 months of financial
data available are also eliminated from the Index. The resulting universe is expected to be composed primarily of highly liquid,
mid- and large-cap stocks.
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Generic
Momentum Screen
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The second stage of
Index construction screens the universe of companies to identify the 10% with the highest cumulative return for the past 12
months, excluding the last (12th) month and eliminating the rest of the universe.
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Quality
of Momentum Screen
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The third
stage of Index construction employs a momentum quality screen to identify which of the remaining companies has experienced
the most consistent positive returns, as opposed to short-lived success during the 12-month period measured above. This screen
measures the number of days during the 12-month period measured above for which a company’s returns were positive or
negative. This quality screen, along with a screen to eliminate companies not meeting certain liquidity thresholds, generally
eliminates approximately 50% of the remaining Index constituents.
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Seasonality
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To account for seasonal
(i.e., quarter-end) effects on a company’s performance, the Index is reconstituted quarterly near the beginning of March,
June, September, and December, approximately one month ahead of each calendar quarter-end.
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Portfolio
Construction
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At the time of each
reconstitution of the Index, each Index constituent is equally-weighted. The date of each subsequent reconstitution of the
Index will be available on the Fund’s website at www.alphaarchitect.com/funds/contact at least one week prior to such
date.
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The
Fund’s Investment Strategy
Under normal
circumstances, at least 80% of the Fund’s total assets (exclusive of collateral held from securities lending) will be invested
in the component securities of the Index and investments that have economic characteristics that are substantially identical to
the economic characteristics of such component securities (e.g., depositary receipts). The Adviser expects that, over time, the
correlation between the Fund’s performance and that of the Index, before fees and expenses, will be 95% or better.
The Fund
will generally use a “replication” strategy to seek to achieve its investment objective, meaning the Fund will invest
in all of the component securities of the Index in the same approximate proportions as in the Index, but may, when the Adviser
believes it is in the best interests of the Fund, use a “representative sampling” strategy, meaning the Fund may invest
in a sample of the securities in the Index whose risk, return and other characteristics closely resemble the risk, return and
other characteristics of the Index as a whole.
The Fund
may also invest up to 20% of its assets in cash and cash equivalents, other investment companies, as well as securities and other
instruments not included in the Index but which the Adviser believes will help the Fund track the Index. For example, the Fund
may invest in securities that are not components of the Index to reflect various corporate actions and other changes to the Index
(such as reconstitutions, additions and deletions).
Principal
Risks
An investment in the Fund involves
risks, including those described below. There is no assurance that the Fund will achieve its investment objective. An investor
may lose money by investing in the Fund. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the
FDIC or any government agency.
Foreign Investment Risk. Returns
on investments in foreign securities could be more volatile than, or trail the returns on, investments in U.S. securities. Investments
in or exposures to foreign securities are subject to special risks, including risks associated with foreign securities generally,
including differences in information available about issuers of securities and investor protection standards applicable in other
jurisdictions; capital controls risks, including the risk of a foreign jurisdiction imposing restrictions on the ability to repatriate
or transfer currency or other assets; currency risks; political, diplomatic and economic risks; regulatory risks; and foreign
market and trading risks, including the costs of trading and risks of settlement in foreign jurisdictions.
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·
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Risks
Related to Investing in Australia: To the extent the Fund invests in Australian
securities, it will be subject to risks related to investing in Australia. Investments
in Australian issuers may subject the Fund to regulatory, political, currency, security,
and economic risk specific to Australia. The Australian economy is heavily dependent
on exports from the agricultural and mining sectors. This makes the Australian economy
susceptible to fluctuations in the commodity markets. Australia is also dependent on
trading with key trading partners.
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·
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Risks
Related to Investing in Europe: To the extent the Fund invests in European securities,
it will be subject to risks related to investing in Europe. The economies and markets
of European countries are often closely connected and interdependent, and events in one
country in Europe can have an adverse impact on other European countries. The Fund makes
investments in securities of issuers that are domiciled in, or have significant operations
in, member countries of the European Union (the EU) that are subject to economic
and monetary controls that can adversely affect the Funds investments. The European
financial markets have experienced volatility and adverse trends in recent years and
these events have adversely affected the exchange rate of the euro and may continue to
significantly affect other European countries. Decreasing imports or exports, changes
in governmental or EU regulations on trade, changes in the exchange rate of the euro,
the default or threat of default by an EU member country on its sovereign debt, and/or
an economic recession in an EU member country may have a significant adverse effect on
the economies of EU member countries and their trading partners, including some or all
of the European countries in which the Fund invests.
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In addition, in a referendum
held in 2016, the United Kingdom resolved to leave the European Union, an event commonly known as “Brexit”. The result
has led to political and economic instability, volatility in the financial markets of the United Kingdom and more broadly across
Europe.
Depositary Receipts Risk.
The risks of investments in depositary receipts, including American Depositary Receipts (“ADRs”), European Depositary
Receipts (“EDRs”), and Global Depositary Receipts (“GDRs”), are substantially similar to Foreign Investment
Risk. In addition, depositary receipts may not track the price of the underlying foreign securities, and their value may change
materially at times when the U.S. markets are not open for trading.
Momentum Style Risk. Investing
in or having exposure to securities with positive momentum entails investing in securities that have had above-average recent
returns. These securities may be more volatile than a broad cross-section of securities. Returns on securities that have previously
exhibited momentum may be less than returns on other styles of investing or the overall stock market. Momentum can turn quickly
and cause significant variation from other types of investments, and stocks that previously exhibited high momentum may not experience
continued positive momentum. In addition, there may be periods when the momentum style is out of favor, and during which the investment
performance of the Fund using a momentum strategy may suffer.
Quantitative Security Selection
Risk. Data for some companies may be less available and/or less current than data for companies in other markets. The Index
uses a quantitative model, and its processes could be adversely affected if erroneous or outdated data is utilized. In addition,
securities selected using the quantitative model could perform differently from the financial markets as a whole as a result of
the characteristics used in the analysis, the weight placed on each characteristic and changes in the characteristic’s historical
trends.
Equity Investing Risk. An
investment in the Fund involves risks similar to those of investing in any fund holding equity securities, such as market fluctuations,
changes in interest rates and perceived trends in stock prices. The values of equity securities could decline generally or could
underperform other investments. In addition, securities may decline in value due to factors affecting a specific issuer, market
or securities markets generally.
Passive Investment Risk. The
Fund is not actively managed and the Adviser will not sell shares of a security due to current or projected underperformance of
a security, industry or sector, unless that security is removed from the Index, sold in connection with a reconstitution of the
Index as addressed in the Index methodology, or sold to comply with the Fund’s investment limitations (for example, to maintain
the Fund’s tax status). Maintaining investments regardless of market conditions or the performance of individual investments
could cause the Fund’s return to be lower than if the Fund employed an active strategy.
Tracking Error Risk. As with
all index funds, the performance of the Fund and its Index may differ from each other for a variety of reasons. For example, the
Fund incurs operating expenses and portfolio transaction costs not incurred by the Index. In addition, the Fund may not be fully
invested in the securities of the Index at all times or may hold securities not included in the Index.
Investment Risk. When you
sell your Shares of the Fund, they could be worth less than what you paid for them. Therefore, you may lose money by investing
in the Fund.
Premium-Discount Risk. The
Shares may trade above or below their net asset value (“NAV”). The market prices of Shares will generally fluctuate
in accordance with changes in NAV as well as the relative supply of, and demand for, Shares on the Cboe BZX Exchange, Inc. (the
“Exchange”) or other securities exchanges. The trading price of Shares may deviate significantly from NAV during periods
of market volatility or limited trading activity in Shares.
Secondary Market Trading Risk.
Investors buying or selling Shares in the secondary market will pay brokerage commissions or other charges imposed by brokers
as determined by that broker. Brokerage commissions are often a fixed amount and may be a significant proportional cost for investors
seeking to buy or sell relatively small amounts of Shares.
Mid-Capitalization Company Risk.
Investing in securities of mid-capitalization companies involves greater risk than customarily is associated with investing
in larger, more established companies. These companies’ securities may be more volatile and less liquid than those of more
established companies. Often mid-capitalization companies and the industries in which they focus are still evolving and, as a
result, they may be more sensitive to changing market conditions.
Trading Risk. Although the
Shares are listed on the Exchange, there can be no assurance that an active or liquid trading market for them will be maintained.
In addition, trading in Shares on the Exchange may be halted.
High Portfolio Turnover Risk.
The Fund’s investment strategy may from time to time result in higher turnover rates. This may increase the Fund’s
brokerage commission costs, which could negatively impact the performance of the Fund. Rapid portfolio turnover also exposes shareholders
to a higher current realization of short-term capital gains, distributions of which would generally be taxed to you as ordinary
income and thus cause you to pay higher taxes.
Authorized
Participants, Market Makers and Liquidity Providers Concentration Risk. The Fund has a limited number of financial institutions
that may act as Authorized Participants (“APs”). In addition, there may be a limited number of market makers and/or
liquidity providers in the marketplace. To the extent either of the following events occur, Shares may trade at a material discount
to NAV and possibly face delisting: (i) APs exit the business or otherwise become unable to process creation and/or redemption
orders and no other APs step forward to perform these services, or (ii) market makers and/or liquidity providers exit the
business or significantly reduce their business activities and no other entities step forward to perform their functions.
Quarterly Rebalance Risk. Because
the Index is reconstituted on a quarterly basis, (i) the Index’s market exposure may be affected by significant market
movements promptly following the quarterly reconstitution that are not predictive of the market’s performance for the subsequent
quarterly period and (ii) changes to the Index’s market exposure may lag a significant change in the market’s direction
(up or down) by as long as a quarter if such changes first take effect promptly following the quarterly reconstitution. Such lags
between market performance and changes to the Index’s exposure may result in significant underperformance relative to the
broader equity or fixed income market.
Performance
The following information provides
some indication of the risks of investing in the Fund. The bar chart shows the annual returns for the Fund. The table shows how
the Fund’s average annual returns for one-year and since inception periods compare with those of a broad measure of market
performance. Prior to January 31, 2017, the Fund was actively-managed by the Adviser using a quantitative strategy substantially
similar to the methodology of the Index. The Fund’s past performance, before and after taxes, is not necessarily an indication
of how the Fund will perform in the future. Performance information is also available on the Fund’s website at www.alphaarchitect.com/funds
or by calling the Fund at (215) 882-9983.
Calendar Year
Total Return as of December 31, 2019
During the period of time shown in
the bar chart, the Fund’s highest return for a calendar quarter was 10.34% (quarter ended March 31, 2019) and the Fund’s
lowest return for a calendar quarter was - 17.60% (quarter ended December 31, 2018).
Average Annual Total Returns
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(for periods ended December 31, 2019)
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1 Year
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Since Inception
(12/22/15)
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Return Before Taxes
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17.42%
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2.88%
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Return After Taxes on Distributions
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17.24%
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2.78%
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Return After Taxes on Distributions and Sale of Shares
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10.70%
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2.32%
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MSCI EAFE Growth Index (reflects no deduction for fees, expenses or taxes)
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28.43%
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9.46%
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Alpha Architect International Quantitative Momentum Index (reflects no deduction for fees, expenses or taxes)
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19.04%
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N/A1
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1
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Since
Inception performance is not shown for the Index because the calculation and publication
of the value of the Index did not commence prior to December 31, 2016.
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After-tax returns are calculated
using the highest historical individual federal marginal income tax rates during the period covered by the table and do not reflect
the impact of state and local taxes. Actual after-tax returns depend on your tax situation and may differ from those shown and
are not relevant if you hold your shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts.
In some cases, the return after taxes may exceed the return before taxes due to an assumed tax benefit from any losses on a sale
of Fund shares at the end of the measurement period.
Investment
Adviser
Empowered Funds,
LLC serves as the investment adviser of the Fund.
Portfolio
Manager
Mr. Tao Wang is the
portfolio manager for the Fund and has managed the Fund since its inception in 2015.
PURCHASE AND SALE OF FUND SHARES
The Fund issues and redeems Shares
on a continuous basis only in large blocks of Shares, typically 50,000 Shares, called “Creation Units,” and only APs
(typically, broker-dealers) may purchase or redeem Creation Units. Creation Units generally are issued and redeemed ‘in-kind’
for securities and partially in cash but may also be issued and redeemed only for cash. Individual Shares may only be purchased
and sold in secondary market transactions through brokers. Once created, individual Shares generally trade in the secondary market
at market prices that change throughout the day. Market prices of Shares may be greater or less than their NAV. Except when aggregated
in Creation Units, the Fund’s shares are not redeemable securities.
TAX INFORMATION
The Fund’s distributions generally
are taxable to you as ordinary income, capital gains, or some combination of both, unless your investment is in an Individual
Retirement Account (“IRA”) or other tax-advantaged account. However, subsequent withdrawals from such a tax-advantaged
account may be subject to federal income tax. You should consult your tax advisor about your specific tax situation.
PURCHASES THROUGH BROKER-DEALERS
AND OTHER FINANCIAL INTERMEDIARIES
If you purchase
Shares through a broker-dealer or other financial intermediary, the Fund and its related companies may pay the intermediary for
the sale of Shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or
other intermediary and your salesperson to recommend Shares over another investment. Ask your salesperson or visit your financial
intermediary’s website for more information.
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