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(CNN Business) —  

For most investors, picking a stock or fund is about finding something that you think is worth buying – a company with strong earnings potential or an ETF that owns market leaders.

But one new exchange-traded fund takes that philosophy and flips it on its head. Instead of identifying top companies to buy, the GraniteShares XOUT U.S. Large Cap ETF (XOUT) starts with the S&P 500 and throws out the companies in that blue chip index that you don’t want to own.

“Sometimes it’s more important what you leave out than what you put in,” said David Barse, CEO of XOUT Capital, the company that created the index on which the ETF is based.

Barse said his firm looked at several factors, including revenue growth, research and development expenditures and hiring levels, to identify the 250 companies in the S&P 500 that are at most risk of being disrupted by competitors.

He added that the selection process is all based on quantitative rules – so there isn’t a fund manager deciding which stock is in and which is out.

The ETF, which launched earlier this month, will be rebalanced every quarter, which means that some of the companies currently not in the ETF could be added later.

Big Tech makes up a large chunk of the fund

And there are some surprising omissions in the ETF, including Walmart (WMT) and Disney (DIS).

Neither made the cut even though Walmart has spent heavily on acquisitions to bolster its digital commerce business in order to catch up to Amazon (AMZN) while Disney is bulking up in streaming media with its new Disney+ network that will take on Netflix (NFLX).

Some other notable exclusions? Warren Buffett’s Berkshire Hathaway (BRKB), oil giants Exxon Mobil (XOM) and Chevron (CVX), consumer products king Procter & Gamble (PG), big financial firms Bank of America (BAC) and Wells Fargo (WFC) and telecoms Verizon (VZ) and AT&T (T). (CNN parent company WarnerMedia is owned by AT&T (T).)

Still, it’s important to point out that the ETF looks a lot like most other S&P 500 funds out there.

Because it is market-cap based, the top holdings are the index’s five largest companies – which just so happen to be tech giants Microsoft (MSFT), Apple (AAPL), Amazon (AMZN), Google owner Alphabet (GOOGL) and Faceboo (FB)k.

That means you aren’t necessarily investing in the most innovative companies out there with this ETF; you are simply buying the companies that aren’t getting disrupted.

Will Rhind, CEO of GraniteShares, the ETF firm that partnered with XOUT Capital on the fund, said that about a third of the ETF’s holdings are tech companies – a tad higher than the overall index’s 29% weighting from the tech sector.

But Barse added that just because you are a tech company does not guarantee inclusion in the fund either.

“Tech, as a sector, is not immune. It’s possible that many large cap techs are one day going to get disrupted themselves,” he said.

Rhind noted that IBM (IBM) is currently not in the fund, although that could change if the company’s recent acquisition of open source software leader Red Hat boosts Big Blue’s cloud revenue.

“This is not a permanent exclusion. Companies can be added back,” Rhind said.

So does this mean the ETF is a good choice for investors?

For what it’s worth, Barse said that based on backtesting, the index the fund is based on has a track record of beating the broader market by about 3 percentage points annually for the past few years.

Rhind added that a big chunk of this outperformance is due to the fact that the ETF has excluded major stock market laggard General Electric (GE) for the past few years.