Background Description of Advisory Firm Newfound Research LLC (“Newfound”) is primarily an asset management firm that creates and manages rule-based, quantitative investment strategies and solutions that are delivered via a model or index. Newfound was founded in August 2008 as a Delaware limited liability company in connection with the licensing of data to a third-party, which became its first client. Newfound’s owners are Corey Hoffstein (through his wholly owned company, Newfound Holdings LLC) and Tom Rosedale (through his wholly owned company, Sand Hill Cove Management LLC), each of whom owns 50% of the company. Mr. Hoffstein is Newfound’s Chief Investment Officer, Chief Executive Officer, and Chief Technology Officer. Newfound Strategies Newfound’s strategy offerings are generally focused on the concept of return stacking. The Return Stacked® brand is co-owned by Newfound Research LLC and ReSolve Asset Management SEZC (Cayman). Additionally, Newfound has created and continues to manage numerous custom investment solutions where clients that have requested a model or index licensing solution. Newfound Clients Newfound’s clients include several ETFs, registered investment advisers, broker-dealers and other asset management firms and financial intermediaries. Types of Advisory Services and types of Investment Advice Newfound Advisory Services Newfound serves as a sponsor and sub-adviser to several ETFs; an index model provider to several ETFs; and a model license provider to registered investment advisers, broker-dealers and other asset management firms and financial intermediaries. Newfound offers its investment strategies through the following general solutions; collectively referred to as (“Newfound Model Solutions”) or individually referred to as (“Models”):
• (“Index Model”) – Investment models that are Newfound developed for third party ETF sponsors for the management of ETFs and alike.
• (“Allocation Model”) – Investment models that are Newfound developed strategies based on traditional allocation targets or strategy focus with the incorporation of return stacking approach.
• (“Custom Model”) – Investment models that are Newfound developed strategies for a single exclusive client. These models are typically designed for the client based on their specifications.
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(“Newfound Related ETFs”) – Investment models that are Newfound developed for an ETFs where Newfound serves as sub-adviser and sponsor. Newfound Model Solutions involve Newfound developing and managing Models and updating the sponsors or clients (“Sponsors”) as to changes in the Models which are periodically rebalanced on a pre-determined schedule. The Sponsors are then responsible for trading their client accounts to adjust the holdings to be in line with Newfound’s recommended Model, if they choose to follow Newfound’s recommendations. The Sponsor is responsible for making all investment decisions and handling all suitability determinations, trading, reporting and custody matters. The Model and the recommendations implicit in the Model are not tailored to the specific needs or circumstances of the Sponsor’s clients. Newfound does not have an advisory relationship with the end-investor under Model licensing arrangements. Each Model generally includes allocations to Funds, and ETFs, including Newfound Related ETFs, in accordance with applicable target allocations established for the Model. The Models are not limited to allocations to Newfound Related ETFs; however, a Model may be allocated up to 100% with Newfound Related ETFs. In the event that a Newfound Related ETF is recommended and utilized in a Model, Newfound will receive an additional management fee in accordance with the applicable prospectus. For certain Newfound Model Solutions, Newfound has historically (and may in the future) be contracted by certain ETF providers to design and market models that utilize the providers’ ETFs. The ETFs are unaffiliated with Newfound and Newfound does not charge a strategist fee to the individuals who invest in the Model. The providers whose ETFs are utilized in these models pay Newfound a fee in exchange for inclusion in these models and associated marketing efforts. See Item 10 below for further information regarding the potential conflict of interest. Wrap and SMAs Newfound does not participate in any wrap fee programs or offer separately managed accounts. Assets under Management (Advisement) As of December 31, 2023, Newfound was actively managing $122,126,185 of assets on a discretionary basis. Additionally, the Firm provides advice on approximately $103,282,628.44 of assets on a non-discretionary basis.