Best And Worst Q1 2020: Large Cap Blend ETFs And Mutual Funds
Summary
- The Large Cap Blend style ranks third in Q1'20.
- Based on an aggregation of ratings of 61 ETFs and 712 mutual funds in the Large Cap Blend style.
- EPS is our top-rated Large Cap Blend style ETF and GQLOX is our top-rated Large Cap Blend style mutual fund.
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The Large Cap Blend style ranks third out of the twelve fund styles as detailed in our Q1'20 Style Ratings for ETFs and Mutual Funds report. Last quarter, the Large Cap Blend style ranked first. It gets our Attractive rating, which is based on an aggregation of ratings of 61 ETFs and 712 mutual funds in the Large Cap Blend style. See a recap of our Q4'19 Style Ratings here.
Figures 1 and 2 show the best and worst rated ETFs and mutual funds in the style. Not all Large Cap Blend style ETFs and mutual funds are created the same. The number of holdings varies widely (from 20 to 1512). This variation creates drastically different investment implications and, therefore, ratings.
Investors seeking exposure to the Large Cap Blend style should buy one of the Very Attractive rated ETFs or mutual funds from Figures 1 and 2.
Our Robo-Analyst technology empowers our ETF and mutual fund rating methodology, which leverages our 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 and Worst Ratings
* Best ETFs exclude ETFs with TNAs less than $100 million for inadequate liquidity.
Sources: New Constructs, LLC and company filings
SPDR MFS Systematic Core Equity ETF (SYE) is excluded from Figure 1 because its total net assets are below $100 million and do not meet our liquidity minimums.
Figure 2: Mutual Funds with the Best and 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
WisdomTree US LargeCap Fund (EPS) is the top-rated Large Cap Blend ETF and GMO Quality Fund (GQLOX) is the top-rated Large Cap Blend mutual fund. Both earn a Very Attractive rating.
Davis Select US Equity ETF (DUSA) is the worst rated Large Cap Blend ETF and Large Cap Value Fund (PAGTX) is the worst rated Large Cap Blend mutual fund. DUSA earns a Neutral rating and PAGTX 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.
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 Large 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 on Jan. 23, 2020.
Disclosure: David Trainer, Kyle Guske II, and Matt Shuler receive no compensation to write about any specific stock, style, or theme.
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