Best And Worst Q2 2020: Large Cap Growth ETFs And Mutual Funds
Summary
- The Large Cap Growth style ranks seventh in Q2'20.
- Based on an aggregation of ratings of 24 ETFs and 697 mutual funds in the Large Cap Growth style.
- SPGP is our top-rated Large Cap Growth style ETF and DUSLX is our top-rated Large Cap Growth style mutual fund.
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The Large Cap Growth style ranks seventh out of the twelve fund styles as detailed in our Q2'20 Style Ratings for ETFs and Mutual Funds report. Last quarter, the Large Cap Growth style ranked sixth. It gets our Neutral rating, which is based on an aggregation of ratings of 24 ETFs and 697 mutual funds in the Large Cap Growth style. See a recap of our Q2'20 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 21 to 554). 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.
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
The Fidelity Stocks for Inflation ETF (FCPI) and the Invesco S&P 500 Momentum ETF (SPMO) 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
Four mutual funds are excluded from Figure 2 because their total net assets (TNA) are below $100 million and do not meet our liquidity minimums.
The Invesco S&P 500 GARP ETF (SPGP) is the top-rated Large Cap Growth ETF and the DFA Investments U.S. Large Cap Growth Portfolio (DUSLX) is the top-rated Large Cap Growth mutual fund. SPGP earns a Very Attractive rating and DUSLX earns an Attractive rating.
The iShares Morningstar Large Cap Growth ETF (JKE) is the worst-rated Large Cap Growth ETF and the PACE Large Co. Growth Equity Investments (PLAAX) is the worst-rated Large Cap Growth mutual fund. JKE earns a Neutral rating and PLAAX 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. We perform this diligence with scale. 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 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 was originally published on April 24, 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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