Contrary to the belief that founders are simply high-risk takers, their outperformance often stems from a systematic process of de-risking their venture at every stage of growth. This methodical approach is a key differentiator compared to non-founder-led companies.
Data analysis shows the 'founder effect' on company performance is only present when the founder serves in a daily executive role, like CEO or CTO. A founder's presence as a Chairman or board member does not correlate with the same outperformance, indicating that hands-on operational control is the critical factor.
To avoid over-concentration in mega-caps, the Founders 100 ETF caps any single stock at 7.5% during quarterly rebalancing. This modified market cap approach ensures a long tail of smaller positions can still drive overall portfolio performance, especially on days when the largest holdings are down.
Instead of waiting for a founder's actual departure, the Founders 100 ETF's primary sell discipline is to exit a position within 90 days of the resignation announcement. This rule-based approach aims to get ahead of the market uncertainty and potential stock decline that often follows news of a key leader's exit.