Best And Worst Q1 2020: Large Cap Growth ETFs And Mutual Funds
Summary
- The Large Cap Growth style ranks sixth in Q1'20.
- Based on an aggregation of ratings of 24 ETFs and 691 mutual funds in the Large Cap Growth style.
- SPGP is our top-rated Large Cap Growth style ETF and FUQIX is our top-rated Large Cap Growth style mutual fund.
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The Large Cap Growth style ranks sixth out of the 12 fund styles as detailed in our Q1'20 Style Ratings for ETFs and Mutual Funds report. Last quarter, the Large Cap Growth style ranked fifth. It gets our Neutral rating, which is based on an aggregation of ratings of 24 ETFs and 691 mutual funds in the Large Cap Growth style. See a recap of our Q4'19 Style Ratings here.
Figures 1 and 2 show the five best and worst rated ETFs and mutual funds in the style. Not all Large Cap Growth style ETFs and mutual funds are created the same. The number of holdings varies widely (from 22 to 556). This variation creates drastically different investment implications and, therefore, ratings.
Investors seeking exposure to the Large Cap Growth style should buy one of the Attractive-or-better 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 – 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 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
GQG Partners Global Quality Equity Fund (GQRIX, GQRRX, GQRPX), Mundoval Fund (MUNDX), and Alta Quality Growth Fund (AQLGX) are excluded from Figure 2 because their total net assets (TNA) are below $100 million and do not meet our liquidity minimums.
Invesco S&P 500 GARP ETF (SPGP) is the top-rated Large Cap Growth ETF and Fidelity SAI US Quality Index Fund (FUQIX) is the top-rated Large Cap Growth mutual fund. Both earn a Very Attractive rating.
ClearBridge Large Cap Growth ESG ETF (LRGE) is the worst rated Large Cap Growth ETF and Dunham Focused Large Cap Growth Fund (DAFGX) is the worst rated Large Cap Growth mutual fund. LRGE earns a Neutral rating and DAFGX 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 Growth 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.
This article was written by
Analyst’s 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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