Research Affiliates Deletions ETF (NIXT)

On our desk, we are closely tracking NIXT's micro-cap structure and its core mandate of picking up stocks dropped from market-cap weighted indices. While the underlying premise targets small-cap value outperformance over the long haul, the relative lack of sustained liquidity with average volumes floating around 2,000 shares keeps us cautious about building substantial block allocations.

Looking at the short interest data for July, NIXT saw a notable jump of 64.9% reaching 3,865 shares shorted as of mid-July. With an average volume near 2,004 shares, the days-to-cover ratio sits comfortably low at 1.9 days, representing roughly 0.3% of the float. This indicates short-term speculative positioning is ticking up, though absolute dollar volumes remain minimal.

Institutional sponsorship for NIXT appears somewhat mixed based on recent Q2 disclosures. While a few legacy positions like Royal Bank of Canada boosted their stakes substantially in prior periods, aggregate fund counts show 6 institutions holding roughly $1.54M, with 3 funds completely closing out their exposures. It tells me that early institutional adoption is still finding its footing.

When analyzing the index methodology for the Research Affiliates Deletions ETF, the focus is strictly on unloved companies that have fallen out of traditional large and mid-cap indices due to falling valuations. For our quantitative modeling, isolating these equal-weighted annual rebalances offers a clean proxy for tracking distressed large-cap dropouts turned small-cap value plays.

Reviewing the trailing short float metrics from earlier in the year, short interest was practically negligible in January and May (hovering under 0.1%). The sudden acceleration in June and July short interest—up over 244% in June and another 64.9% in July—hints at tactical positioning by short-term traders testing the fund's sparse liquidity profile rather than a structural short thesis.