Let’s now look at a couple of examples to deepen our understanding of the ETF screeners. In our first example, we will look for ETFs in Equity Large Cap that have low tracking differences with a high Sharpe ratio.
We will begin with filtering our universe.
As we see 55 ETFs are shortlisted. Next, we will filter the ETFs with low tracking differences. We will select a 1-year tracking difference and choose the bottom 30%.
Smaller tracking differences indicate a more accurate replication of the benchmark's performance. As we can see, we are now left with 16 ETFs.
Finally, we will select ETFs with a high Sharpe ratio. We will select the Sharpe ratio metric and choose the Top 10%.
We now have our finalized list of ETFs. We hope this example helped cement your understanding of how to build an ETF screen more.
Let’s now look at another example.