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There are no Attractive-rated invest­ment styles. The pri­mary dri­ver behind the Neutral-or-worse rat­ings is poor port­fo­lio man­age­ment. Fund man­agers are sim­ply not pick­ing stocks well. More details in my arti­cle "A Cheap Fund Is Not Always a Good Fund." Arti­cles on all style and sec­tor funds are here.

Investors look­ing for the best style funds should look no fur­ther than the All-Cap and Large-Cap styles. See Fig­ure 1. Only these styles house any Attractive-or-better rated funds. My style rat­ings are based on the aggre­ga­tion of my rat­ings for each fund in each style. Soon to fol­low are detailed reports on the best and worst funds in each style, sim­i­lar to my best and worst sec­tor fund arti­cles.

See Fig­ures 4 through 13 for a detailed break­down of rat­ings dis­tri­b­u­tions by invest­ment style. See our fund screener for rank­ings and rat­ings along with free reports on all 7400+ mutual funds and ETFs.

(Click charts to expand)

Fig­ure 1: Rat­ings For All Invest­ment Styles


Charts Source: New Con­structs, LLC and com­pany filings

To earn an Attrac­tive Predic­itve Rat­ing, a fund must have high-quality hold­ings and low costs. Only 87 invest­ment style funds meet these require­ments and receive our Attractive-or-better rat­ing, which is less than 2% of funds.

Ster­ling Cap­i­tal Funds: Ster­ling Cap­i­tal Equity Income Fund (BEGIX) is my top large-cap value fund. It gets an Attrac­tive rat­ing as does the Hen­nessy Funds Trust: Hen­nessy Cor­ner­stone Large Growth Fund (HILGX), my top all-cap blend fund.

One of my favorite stocks in BEGIX is Trav­ellers (NYSE:TRV). It gen­er­ates strong eco­nomic earn­ings and has a great val­u­a­tion. Its cur­rent stock price (~$59.39) implies the company's prof­its will per­ma­nently decline by 30%. That is the kind of risk/reward I like. One of my favorite stocks in HILGX is Humana (NYSE:HUM). I am bull­ish on the healthcare sec­tor and HUM is one of the best stocks in that sec­tor. An ROIC of 12% is excel­lent for a hos­pi­tal yet the val­u­a­tion of the stock does not seem to care. At ~$90.28, the stock's val­u­a­tion implies the com­pany will never grow its after-tax cash flow (NOPAT) beyond its cur­rent level. Again, that is the kind of risk/reward I like.

Ivy Funds: Ivy Small Cap Value Fund (IYSBX) is the worst small-cap value fund and gets my Very Dan­ger­ous rat­ing. The Port­fo­lio Man­age­ment rat­ing for this fund is Dan­ger­ous and the Total Annual Cost Rat­ing is Very Dan­ger­ous, result­ing in a lose-lose value propo­si­tion for investors. The man­agers at IYSBX have a lot of nerve charg­ing an investor over 5% per year over 3 years.

One of my least favorite stocks in this fund is Tri­umph Group, Inc. (NYSE:TGI). It gets my Very Dan­ger­ous rat­ing because of mis­lead­ing earn­ings and an expen­sive val­u­a­tion. The company's ROIC is 7%, well below its cost of cap­i­tal. To jus­tify its val­u­a­tion, the stock at $63 implies the com­pany will grow its prof­its at 10% com­pounded annu­ally for 15 years. Good luck.

Fig­ure 2 shows the dis­tri­b­u­tion of our Pre­dic­tive Rat­ings for all invest­ment style ETFs and mutual funds.

Fig­ure 2: Dis­tri­b­u­tion of Funds and Assets by Pre­dic­tive Rating

Fig­ure 3 offers addi­tional details on the qual­ity of the invest­ment style funds. Note that the aver­age Total Annual Cost of Very Dan­ger­ous funds is almost 7 times that of Very Attrac­tive funds.

Fig­ure 3: Pre­dic­tive Rat­ing Dis­tri­b­u­tion Stats


* Avg TAC = Weighted Aver­age Total Annual Costs


This table shows that only the best of the best funds get our Very Attrac­tive Rat­ing: they must hold good stocks AND have low costs. Investors deserve to have the best of both and I am here to give it to them.

Fig­ure 4 presents a map­ping of Very Attrac­tive funds by invest­ment style. The chart shows the num­ber of Very Attrac­tive funds in each invest­ment style and the per­cent­age of assets allo­cated to Very Attractive-rated funds in each style.

Only 4 invest­ment style funds earn our Very Attrac­tive rating.

Fig­ure 4: Dis­tri­b­u­tion of Very Attrac­tive Funds by Invest­ment Style

Fig­ure 5 presents the data charted in Fig­ure 4.

Fig­ure 5: Dis­tri­b­u­tion of Very Attrac­tive Funds by Invest­ment Style

Fig­ure 6 presents a map­ping of Attrac­tive funds by invest­ment style. The chart shows the num­ber of Attrac­tive funds in each invest­ment style and the per­cent­age of assets allo­cated to Attractive-rated funds in each style.

Note that the Large-Cap and All-Cap styles are the only styles to house Attractive-rated funds. Investors should avoid pur­chas­ing any Small- and Mid-Cap funds.

Fig­ure 6: Dis­tri­b­u­tion of Attrac­tive Funds by Invest­ment Style


Fig­ure 7 presents the data charted in Fig­ure 6.

Fig­ure 7: Dis­tri­b­u­tion of Attrac­tive Funds by Invest­ment Style


Fig­ure 8 presents a map­ping of Neu­tral funds by invest­ment style. The chart shows the num­ber of Neu­tral funds in each invest­ment style and the per­cent­age of assets allo­cated to Neutral-rated funds in each style.

Fig­ure 8: Dis­tri­b­u­tion of Neu­tral Funds by Invest­ment Style


Fig­ure 9 presents the data charted in Fig­ure 8.

Fig­ure 9: Dis­tri­b­u­tion of Neu­tral Funds by Invest­ment Style


Fig­ure 10 presents a map­ping of Dan­ger­ous funds by fund style. The chart shows the num­ber of Dan­ger­ous funds in each invest­ment style and the per­cent­age of assets allo­cated to Dangerous-rated funds in each style.

Every invest­ment style except the Large-Cap-Blend, Large-Cap-Growth, and All-Cap-Blend styles has over 20% of its value invested in Dangerous-rated funds.

Fig­ure 10: Dis­tri­b­u­tion of Dan­ger­ous Funds by Invest­ment Style


Fig­ure 11 presents the data charted in Fig­ure 10.

Fig­ure 11: Dis­tri­b­u­tion of Dan­ger­ous Funds by Invest­ment Style


Fig­ure 12 presents a map­ping of Very Dan­ger­ous funds by fund style. The chart shows the num­ber of Very Dan­ger­ous funds in each invest­ment style and the per­cent­age of assets allo­cated to Very Dangerous-rated funds in each style.

The Small-Cap-Value invest­ment style has 10% of its value invested in funds with Very Dan­ger­ous ratings.

Fig­ure 12: Dis­tri­b­u­tion of Very Dan­ger­ous Funds by Invest­ment Style

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Fig­ure 13 presents the data charted in Fig­ure 12.

Fig­ure 13: Dis­tri­b­u­tion of Very Dan­ger­ous Funds by Invest­ment Style


Source: Roadmap To The Best And Worst Fund Styles