Best And Worst Q2 2020: Large Cap Blend ETFs And Mutual Funds
Summary
- The Large Cap Blend style ranks third in Q2'20.
- Based on an aggregation of ratings of 61 ETFs and 701 mutual funds in the Large Cap Blend style.
- DIA 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 Q2'20 Style Ratings for ETFs and Mutual Funds report. Last quarter, the Large Cap Blend style ranked third as well. It gets our Attractive rating, which is based on an aggregation of ratings of 61 ETFs and 701 mutual funds in the Large Cap Blend 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 Large Cap Blend style ETFs and mutual funds are created the same. The number of holdings varies widely (from 20 to 1,746). 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.
Figure 1: ETFs with the Best & Worst Ratings – Top 5
Sources: New Constructs, LLC and company filings
Columbia Research Enhanced Core ETF (RECS) is excluded from Figure 1 because its 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
Meehan Focus Fund (MEFOX) and Alps Series Clarkston Fund (CILGX) are excluded from Figure 2 because their total net assets (TNA) are below $100 million and do not meet our liquidity minimums.
State Street SPDR Dow Jones Industrial Average ETF (DIA) 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.
Franklin Liberty U.S. Low Volatility (FLLV) is the worst rated Large Cap Blend ETF and Virtus Rampart Sector Trend Fund (PWBAX) is the worst rated Large Cap Blend mutual fund. FLLV earns a Neutral rating, and PWBAX earns 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. 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 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
Our 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 24, 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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