Process & Philosophy
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Investment Process


The RBP®   Methodology enables Transparent Value to systematically apply a disciplined, rules-based process to each of the core investment functions.

  1. Research
  2. Portfolio construction
  3. Portfolio management

Disciplined Research

Transparent Value analysts generate the Required Business Performance®   Probabilities of more than 2,000 stocks according to a strict rules system.


Disciplined Portfolio Construction

Each Transparent Value portfolio is based upon one of the Dow Jones RBP IndexesSM    , which in turn uses the RBP®   Probabilities provided by Transparent Value in its construction. These indexes follow guidelines published in Dow Jones IndexesSM    rule books.


Disciplined Portfolio Management

Portfolio rebalancing only occurs when there is a change in the underlying index components. The portfolio manager has no discretion, eliminating the influence of behavioral biases on his decision making and creating perfect sell discipline.

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Glossary
RBP®
The revenue growth necessary to support the current stock price. Required Business Performance®  is used as a benchmark against which to measure management’s ability to perform in the future. It is calculated using a reverse discounted cash flow valuation model that uses the current stock price as the primary input.
RBP® Probability
The likelihood that management will deliver the Required Business Performance®  to support the stock price. It is calculated by fitting the company’s historical revenue growth to a distribution, then finding the company’s Required Business Performance within this historical distribution.
In the hypothetical example below, the company’s RBP®  Probability, represented by green, is 35% while its Behavioral Risk Indicator, represented by red, is 65%. RBP® Probability
Behavioral Risk Indicator
The likelihood that investors’ systematic behavioral biases have caused misalignment between the stock price and management’s ability to deliver. The Behavioral Risk Indicator is designed to capture the impact that human psychology has on the subjective valuation process used by investors. It is defined as one minus the RBP®  Probability.
In the hypothetical example below, the company’s RBP®  Probability, represented by green, is 35% while its Behavioral Risk Indicator, represented by red, is 65%. Behavioral Risk Indicator
RBP® Methodology
A system of fundamental stock analysis that uses a reverse discounted cash flow valuation model to determine what the stock’s current price implies in terms of future free cash flow and revenue (Required Business Performance®  ) as well as the calculation of the likelihood that management can deliver the Required Business Performance®  , known as RBP®  Probability.
RBP® Platform
The Transparent Value decision support tool consisting of an interactive database containing the proprietary data produced by Transparent Value. Included are the Required Business Performance®  (RBP®  ) values, RBP®  Probabilities and Behavioral Risk Indicators for more than 2,000 global stocks, the Transparent Value mutual fund rating system providing coverage of more than 3,000 funds, and also broad market indicators.
RBP® Snapshot
Provides updated company-specific RBP®  information based on the company's most recent quarterly financial data. The RBP®  Snapshot consists of the RBP®  probability and RBP®  values for a particular company.
The Funds are new and have limited operating history. An investment in the Funds involves risks, including loss of principal. No assurance can be given that the investment objectives described herein will be achieved. The Funds seek to track a quantitative strategy index, meaning that the Funds invest in securities comprising an index created by a proprietary model. The success of the Fund’s principal investment strategies depends on the effectiveness of the model in screening securities for inclusion in the Index.

For more complete information about the Funds, see the prospectus or call 1 (888) 727-6885. Financial Advisors should call 1-855-TV Funds or 1-855-883-8637. Read the prospectus carefully before you invest or send money.

ALPS Distributors, Inc is not affiliated with Guggenheim Investment Management, LLC, Transparent Value Advisors, LLC (“TVA”) and/or Guggenheim Partners, LLC. TVA and ADI are not affiliated with Dow Jones. Transparent Value Funds are distributed by ALPS Distributors, Inc (“ADI”).

There is no assurance the RBP®   methodology will identify companies that will either achieve its RBP®   or outperform the performance other indices. The success of the investment philosophy depends on the effectiveness of the RBP®   methodology in screening securities. Indexes are unmanaged, not subject to fees and not available for direct investment.
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