Best And Worst Q1 2019: All Cap Value ETFs And Mutual Funds

Best And Worst Q1 2019: All Cap Value ETFs And Mutual Funds


The All Cap Value style ranks fourth out of the twelve fund styles as detailed in our Q1’19 Style Ratings for ETFs and Mutual Funds report. Last quarter, the All Cap Value style ranked fourth as well. It gets our Neutral rating, which is based on an aggregation of ratings of 26 ETFs and 369 mutual funds in the All Cap Value style. See a recap of our Q4’18 Style Ratings here.

Figures 1 and 2 show the five best and worst rated ETFs and mutual funds in the style. Not all All Cap Value style ETFs and mutual funds are created the same. The number of holdings varies widely (from 18 to 1554). This variation creates drastically different investment implications and, therefore, ratings.

Investors seeking exposure to the All Cap Value style should buy one of the Attractive-or-better rated ETFs or mutual funds from Figures 1 and 2.

Our Robo-Analyst technology[1] empowers our unique ETF and mutual fund rating methodology, which leverages our rigorous analysis of each fund’s holdings.[2] We think advisors and investors focused on prudent investment decisions should include analysis of fund holdings in their research process for ETFs and mutual funds.

Figure 1: ETFs with the Best & Worst Ratings – Top 5

* Best ETFs exclude ETFs with TNAs less than $100 million for inadequate liquidity.

Sources: New Constructs, LLC and company filings

Three ETFs (QVAL, GMFL, PY) are excluded from Figure 1 because their total net assets (TNA) are below $100 million and do not meet our liquidity minimums.

Figure 2: Mutual Funds with the Best & Worst Ratings – Top 5

All Cap Value Mutual Funds 1Q19* Best mutual funds exclude funds with TNAs less than $100 million for inadequate liquidity.

Sources: New Constructs, LLC and company filings

Six mutual funds (AQVVX, AQVYX, AQVPX, LSVMX, LVAMX, VALAX) are excluded from Figure 2 because their TNA are below $100 million and do not meet our liquidity minimums.

ETF Series Deep Value ETF (DVP) is the top-rated All Cap Value ETF and SunAmerica AIG Focused Dividend Strategy Fund (FDSWX) is the top-rated All Cap Value mutual fund. Both earn a Very Attractive rating.

iShares Russell 1000 Pure U.S. Revenue ETF (AMCA) is the worst rated All Cap Value ETF and Upright Investments Upright Growth Fund (UPUPX) is the worst rated All Cap Value mutual fund. AMCA earns a Neutral rating and UPUPX earns a Very Unattractive rating.

The Danger Within

Buying a fund without analyzing its holdings is like buying a stock without analyzing its business and finances. Put another way, research on fund holdings is necessary due diligence because a fund’s performance is only as good as its holdings’ performance. Don’t just take our word for it, see what Barron’s says on this matter.

PERFORMANCE OF HOLDINGs = PERFORMANCE OF FUND

Analyzing each holding within funds is no small task. Our Robo-Analyst technology enables us to perform this diligence with scale and provide the research needed to fulfill the fiduciary duty of care. More of the biggest names in the financial industry (see At BlackRock, Machines Are Rising Over Managers to Pick Stocks) are now embracing technology to leverage machines in the investment research process. Technology may be the only solution to the dual mandate for research: cut costs and fulfill the fiduciary duty of care. Investors, clients, advisors and analysts deserve the latest in technology to get the diligence required to make prudent investment decisions.

Figures 3 and 4 show the rating landscape of all All Cap Value ETFs and mutual funds.

Figure 3: Separating the Best ETFs from the Worst Funds

Sources: New Constructs, LLC and company filings

Figure 4: Separating the Best Mutual Funds from the Worst Funds

Sources: New Constructs, LLC and company filings

This article originally published on January 24, 2019.

Disclosure: David Trainer and Kyle Guske II receive no compensation to write about any specific stock, style, or theme.

[1]Harvard Business School features the powerful impact of our research automation technology in the case New Constructs: Disrupting Fundamental Analysis with Robo-Analysts.

[2]Ernst & Young’s recent white paper “Getting ROIC Right” proves the superiority of our holdings research and analytics.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.



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