Best And Worst Q4 2020: All Cap Blend ETFs And Mutual Funds

Nov. 18, 2020 11:32 AM ETADRE, CNBS, DVALX, LOGIX

Summary

  • The All Cap Blend style ranks fourth in Q4'20.
  • Based on an aggregation of ratings of 114 ETFs and 758 mutual funds in the All Cap Blend style.
  • ADRE is our top-rated All Cap Blend style ETF and LOGIX is our top-rated All Cap Blend 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 Blend style ranks fourth out of the 12 fund styles as detailed in our Q4'20 Style Ratings for ETFs and Mutual Funds report. Last quarter, the All Cap Blend style ranked fourth as well. It gets our Neutral rating, which is based on an aggregation of ratings of 114 ETFs and 758 mutual funds in the All Cap Blend style. See a recap of our Q3'20 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 Blend style ETFs and mutual funds are created the same. The number of holdings varies widely (from 16 to 3,570). This variation creates drastically different investment implications and, therefore, ratings.

Investors seeking exposure to the All Cap Blend 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

Ten ETFs (WBIG, WBIF, WBIE, WBIL, QWLD, QSY, LSAF, VFQY, LOWC, RAFE) 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 & 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

Advisor Series Scharf Global Opportunity Fund (WRLDX), ProFunds Banks UltraSector ProFund (BKPIX) and Harbor Robeco U.S. Conservative Equities Fund (HRURX, HRUNX, HRUVX) are excluded from Figure 2 because their total net assets (TNA) are below $100 million and do not meet our liquidity minimums.

Invesco BLDRS Emerging Markets 50 ADR Index Fund (ADRE) is the top-rated All Cap Blend ETF and Advisor Series Scharf Fund (LOGIX) is the top-rated All Cap Blend mutual fund. Both earn a Very Attractive rating.

Amplify Seymour Cannabis ETF (CNBS) is the worst rated All Cap Blend ETF and MSS Series Footprints Discover Value Fund (DVALX) is the worst rated All Cap Blend mutual fund. Both earn 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. 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 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 Oct. 20, 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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This article was written by

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New Constructs is an independent research technology firm that provides unrivaled insights into the fundamentals and valuation of private & public businesses. Combining human expertise with machine learning and NLP, the firm shines light into the dark corners (e.g. footnotes) of millions of financial filings and provides superior investment research. The firm's Robo-Analyst technology is the first-ever vertically integrated investment research platform: performing data collection, financial modeling and assigning investment ratings to over 10,000 securities - automatically. This new technology is research automation at its best according to:


   1. Harvard Business School & MIT Sloan prove our fundamental data is superior.


   2. Ernst & Young proves the superiority of our financial analytics over Capital IQ & Bloomberg.


   3. Indiana Kelly School of Business proves our stock ratings outperform human analysts.



If these prestigious institutions trust us so much that they decided to publish official papers to prove the superiority of our research, then you can safely trust us, too.

New Constructs' clients include investors of all types from quant funds like GSAM who subscribe to proprietary data feeds, advisors and individuals who subscribe to our investment research directly through our website.


David is CEO of New Constructs (www.newconstructs.com). David is a distinguished investment strategist and corporate finance expert. He was a 5-yr member of FASB's Investors Advisory Committee. He is author of the Chapter “Modern Tools for Valuation” in The Valuation Handbook (Wiley Finance 2010). 


Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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