WeatherStorm Forensic Accounting Long-Short ETF™ (FLAG)

Please note that the WeatherStorm Forensic Accounting Long-Short ETF Index (FLAGLSX) is scheduled to rebalance by end of day on December 30th, 2016.


On June 23, 2015, the Board of Trustees of Exchange Traded Concepts Trust approved changes to the Forensic Accounting Fund (the “Fund”), which will take effect at the close of business on August 7, 2015. The Fund’s current underlying index, the Del Vecchio Earnings Quality Index (the “Del Vecchio Index”), will be replaced with the WeatherStorm Forensic Accounting Long-Short Index™ (the “Long-Short Index”). After this change takes effect, the Fund will continue to follow its non-fundamental policy to invest at least 80% of its total assets in securities that comprise its underlying index. The new index, the Long-Short Index, seeks to enhance U.S. large cap exposure by offering a long/short portfolio comprised of the 500 largest U.S. stocks by market capitalization, while providing additional return potential through the careful and systematic selection and shorting of stocks based on forensic accounting analysis. Forensic accounting critically dissects companies’ financial statements with the goal of identifying the “red flags” of aggressive accounting and revenue recognition practices. The index construction process aims to identify and allocate capital to higher quality stocks with more sustainable revenues, cash flows and earnings, while at attractive valuations. It also attempts to detect and short lower quality stocks where aggressive accounting practices may have been employed and revenues, cash flows and earnings may be less persistent in the future. The index is constructed with a 100% net equity exposure (130% long, 30% short).


WeatherStorm Forensic Accounting
Long-Short ETF™ (FLAG)

The Science of Accounting Meets the Art of Investing.

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About Flag

WeatherStorm Forensic Accounting Long-Short ETF™ (“FLAG”) was developed to offer the potential benefits of financial statement analysis to investors. FLAG seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of The Forensic Accounting Long-Short Index.

FLAG Fact Sheet

FLAG Fund Summary


Waving Red Flags


Read the Book

Interested in forensic accounting and its uses when investing? "What's Behind The Numbers?" was written by John Del Vecchio, a member of the Vident Index Policy Committee (VIPC) and inspiration behind the Forensic Accounting Long-Short ETF™ (FLAG).

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The Forensic Accounting Long-Short ETF Approach

  1. Define: Universe consists of 500 of the largest capitalized US stocks
  2. Analyze: Perform forensic accounting analysis on each stock
  3. Score: Each stock is assigned a score
  4. Invest: Buy highest scored stocks and short lowest scored stocks to create a 130% long and 30% short portfolio

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The Investment Merits Of Forensic Accounting

Forensic accounting, also referred to as financial statement analysis, uses publicly available financial reports to search for the “red flags” of aggressive accounting practices that some companies have been found to employ. Red flags often indicate underlying business problems and will usually end up reflected in the price of a company’s stock.

Types of red flags identified by forensic accounting may include:

Fictitious Revenue Accelerated Revenue Recognition Inventory Issues Unsustainable Margin Expansion Financial Ratio Adjustments

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News and Events

WeatherStorm Capital – A Vident Group of Companies - Introduces WeatherStorm Forensic Accounting Long-Short ETF

Wednesday, July 22, 2015

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Wednesday, July 8, 2015

Read the Press Release

Exchange Traded Concepts, LLC serves as the investment advisor, and Vident Investment Advisory serves as a sub advisor to the fund. The Funds are distributed by SEI Investments Distribution Co., which is not affiliated with Exchange Traded Concepts, LLC or any of its affiliates. Check the background of SIDCO on FINRA’s BrokerCheck.

Carefully consider the Fund's investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Fund's prospectus, which may be obtained by visiting Read the prospectus carefully before investing.

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice.

Investing involves risk, including the possible loss of principal. Because the Fund will be shorting stocks, it will incur expenses relating to those transactions. The use of short sales could increase the exposure of the Fund to the market, increase losses, and increase the volatility of returns.

There is no guarantee that the Fund or the index will achieve its investment objective.

WeatherStorm Capital™ have been licensed for use by Exchange Traded Concepts, LLC. FLAG Funds are not sponsored, endorsed, issued, sold, or promoted by WeatherStorm Capital™, nor does this company make any representations regarding the advisability of investing in the FLAG Funds.