Best And Worst Q2 2020: All Cap Value ETFs And Mutual Funds
Summary
- The All Cap Value style ranks second in Q2'20.
- Based on an aggregation of ratings of 43 ETFs and 477 mutual funds in the All Cap Value style.
- VALQ is our top-rated All Cap Value style ETF and BVALX is our top-rated All Cap Value style mutual fund.
- Looking for a helping hand in the market? Members of Value Investing 2.0 get exclusive ideas and guidance to navigate any climate. Get started today »
The All Cap Value style ranks second out of the 12 fund styles as detailed in our Q2'20 Style Ratings for ETFs and Mutual Funds report. Last quarter, the All Cap Value style ranked first. It gets our Attractive rating, which is based on an aggregation of ratings of 43 ETFs and 477 mutual funds in the All Cap Value style. See a recap of our Q1'20 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 15 to 1661). 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.
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
Redwood AlphaFactor Tactical Core Fund (RWTIX, RWTNX) is excluded from Figure 2 because its total net assets are below $100 million and do not meet our liquidity minimums.
American Century STOXX U.S. Quality Value ETF (VALQ) is the top-rated All Cap Value ETF and Brown Advisory – Beutel Goodman Large Cap Value Fund (BVALX) is the top-rated All Cap Value mutual fund. Both earn a Very Attractive rating.
First Trust Dorsey Wright Momentum & Low Volatility ETF (DVOL) is the worst rated All Cap Value ETF and Wells Fargo Diversified Equity Fund (NVDAX) is the worst rated All Cap Value mutual fund. Both earn an 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. 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 filingsFigure 4: Separating the Best Mutual Funds from the Worst Funds
Sources: New Constructs, LLC and company filingsOur Robo-Analyst technology empowers our ETF and mutual fund rating methodology, which leverages our analysis of each fund’s holdings.
This article originally published on April 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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