O'neil Growth Index

The O’Neil Growth Index is a systematic strategy based on proprietary growth factors and quantitative research. It holds a long-only portfolio of approximately 70 U.S. high-liquidity large- and mid-cap stocks. The constituent weight of each stock in the index is determined by four factors:

Datagraph Rating

A proprietary O’Neil composite of numerous growth characteristics, including reported earnings, market cap, relative price strength, and others;

1

Volatility

Measures the stock’s standard deviation of returns over the past year, which helps lower the long-term volatility of the index while increasing exposure to large-cap and value stocks;

3

Pullback

A technical factor that measures a stock’s long-term momentum versus its short-term mean reversion characteristics, which increases exposure to stable growth names with positive recent price action;

2

Hotness

A measure of a stock’s recent change versus its historical average, which seeks to minimize stocks that are subject to recent speculative action. Quant Brief (PDF)

4

Datagraph Rating

A proprietary O’Neil composite of numerous growth characteristics, including reported earnings, market cap, relative price strength, and others;

Pullback

A technical factor that measures a stock’s long-term momentum versus its short-term mean reversion characteristics, which increases exposure to stable growth names with positive recent price action;

Volatility

Measures the stock’s standard deviation of returns over the past year, which helps lower the long-term volatility of the index while increasing exposure to large-cap and value stocks;

Hotness

A measure of a stock’s recent change versus its historical average, which seeks to minimize stocks that are subject to recent speculative action. Quant Brief (PDF)

"Recognizing when the market has hit a top or bottomed out is 50% of the whole complicated ball game."

– William J. O’Neil

The index takes positions in growth stocks at optimal entry prices during small pullbacks and exits stocks before they become extended. The majority of stocks have high Datagraph, EPS, and Relative Strength Ratings, proprietary measures developed by William J. O’Neil, and are leaders in profit and sales growth.

Why the O’Neil Growth Index

The primary challenges in constructing a growth portfolio are identifying early-stage growth stocks and avoiding the inevitable drawdown that many growth stocks have after their run up, so the strategy utilizes these factors to improve the timing of entry points and avoid holding stocks that are extended. This allows investors to capture the upside of a growth portfolio while limiting the risk and volatility normally associated with this investing style. Because of the volatile nature of the growth universe, the index also employs a monthly rebalancing with approximately equal weight to avoid idiosyncratic risk.

Track the Index

The O’Neil Growth Index can be found using the Bloomberg symbols OGITR for total return index and OGIPR for price return index. It can also be found in OGA affiliate William O’Neil + Company’s flagship investment platform PANARAY® using the symbols 0OGITR for the total return index and 0OGIPR for the price return index.

The O’Neil Growth Index is also tracked by the recently launched WisdomTree U.S. Growth & Momentum Fund (WGRO).

Index Methodology Document (pdf)