Armor Index Inc. on Tuesday rolled out the Armor US Equity Index ETF (ARMR), a fund of funds product that tracks an in-house index designed to provide exposure to sectors of the U.S. equity market that Armor believes are most likely to generate positive returns. The second part of its mission is to manage downside risk by shifting into U.S. Treasurys when signals indicate that equities aren’t the place to be.

The ARMR fund’s underlying index employs a proprietary, rules-based market performance indicator (MPI) to evaluate individual sectors in the U.S. equity market. Armor posits that sectors that score well based on the MPI offer strong long-term performance potential with lower expected downside risk and volatility. Those sectors that qualify based on their MPI are included in the index, and the fund invests in each sector via an ETF such as, for example, the Vanguard Information Technology ETF. If no sectors appear attractive based on the MPI metric, the index will shift to holding an ETF or ETFs invested mainly in U.S. Treasuries with a maturity range of seven to 10 years.

As of Monday, the fund’s portfolio contained nine Vanguard ETFs that are proxies for equity sectors as determined by the Global Industry Classification Standard. GICS contains 11 sectors, and the two sectors excluded in ARMR were energy and materials.

The equal-weighted index is reconstituted and rebalanced on the last business day of each month. The fund’s expense ratio is 0.50%.

In a press statement announcing the fund’s launch, Armor Index founder Jim Colquitt, who developed his firm’s proprietary algorithm, positioned his company’s first ETF as a way for investors to remain invested in the nearly 11-year bull market in U.S. stocks while protecting against volatility and market downturns.

Colquitt formerly was at Invesco for almost 20 years, where he performed various duties ranging from investment strategy and quantitative research to portfolio management and model portfolio development.

Armor Index has two additional ETFs in the pipeline that follow the same formula as ARMR—one focuses on international equities and the other on emerging-market equities.

Exchange Traded Concepts LLC, a provider of white-label ETF services, is the investment advisor on all three products.

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