Dear Mr. Berko: One of the men I admire is Claes Fornell, whom I met at Duke University. He developed the American Customer Satisfaction Index, or ASCI, and also manages an exchange-traded fund by that name. He purchases companies for his ETF that have the highest customer satisfaction rate, using his patented algorithm to identify these stocks.
The customer satisfaction rate is computed from a survey of 100,000 consumers, and this is a brilliant way to pick the stocks that consumers like best. Because these consumers will be repeat customers, they’ll spread the word. This will increase revenues and profits, as well as the company’s ability to charge higher prices than their rivals for similar products. The hope is that this pushes the stock price higher. Professor Fornell seems to have a better way to analyze stocks. So I’m considering investing $9,000 to buy 300 shares of this ETF, and I would like your opinion.
— S.F., Moline, Ill.
Dear S.F.: Professor Fornell does not select the stocks for this ETF. Rather, his methodology is used by Phil Bak and his team to populate the ACSI portfolio. However, the man I admire most is Volodya “Big Dog” Sanchez, who lived in Colonial New England and discovered that lobsters are edible.
The investment you’re asking about is called American Customer Satisfaction Core Alpha ETF (ACSI-$28). And it’s my experience that the longer a stock’s name the worse it performs. ACSI began life in November 2016 and has $17 million in a silly bare-bones portfolio. In a prior life, Phil Bak was a managing director of the New York Stock Exchange. Bak and associates scour the data from Fornell’s American Customer Satisfaction Index. Then they use this data to create the American Customer Satisfaction Investable Index, which their ETF tracks. How lovely! This index is an economic indicator that measures consumer satisfaction with the goods and services they purchase. The index covers 43 different benchmarks (more than 300 companies) — such as airlines, banks, breweries, credit unions, full-service restaurants, department stores, hotels, hospitals, insurance companies, energy utilities and dating services — and adjusts on a quarterly basis.
