Best And Worst Q1'17: All Cap Blend ETFs And Mutual Funds

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Includes: DIG, IHCAX, SPHQ, SVFAX
by: David Trainer

Summary

The All Cap Blend style ranks second in Q1'17.

Based on an aggregation of ratings of 83 ETFs and 656 mutual funds.

SPHQ is our top-rated All Cap Blend ETF and SVFAX is our top-rated All Cap Blend mutual fund.

The All Cap Blend style ranks second out of the twelve fund styles as detailed in our Q1'17 Style Ratings for ETFs and Mutual Funds report. Last quarter, the All Cap Blend style ranked second as well. It gets our Attractive rating, which is based on an aggregation of ratings of 83 ETFs and 656 mutual funds in the All Cap Blend style. See a recap of our Q4'16 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 Blend style ETFs and mutual funds are created the same. The number of holdings varies widely (from 1 to 3,682). This variation creates drastically different investment implications and, therefore, ratings.

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

Here is our ETF and mutual fund rating methodology, which leverages our rigorous analysis of each fund's holdings. 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

Four ETFs 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

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

Sources: New Constructs, LLC and company filings

The ProFunds UltraDow 30 (MUTF:UDPSX), Valued Advisers Granite Value Fund (MUTF:GVFIX), and DFA Investment Dimensions (MUTF:DFCUX) are excluded from Figure 2 because their total net assets are below $100 million and do not meet our liquidity minimums.

The PowerShares S&P 500 Quality Portfolio ETF (NYSEARCA:SPHQ) is the top-rated All Cap Blend ETF and the Smead Value Fund (MUTF:SVFAX) is the top-rated All Cap Blend mutual fund. Both earn a Very Attractive rating.

The ProShares Ultra Oil & Gas ETF (NYSEARCA:DIG) is the worst rated All Cap Blend ETF and the Hartford Capital Appreciation Fund (MUTF:IHCAX) is the worst rated All Cap Blend mutual fund. Both earn a Very Dangerous 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

Figures 3 and 4 show the rating landscape of all, All Cap Blend 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 here on January 30, 2017.

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

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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