Best And Worst Q1 2021: All Cap Growth ETFs And Mutual Funds

Feb. 18, 2021 10:26 AM ETADOAX, FPX, LEAD, LSIFX, PSET, SPGP2 Comments

Summary

  • The All Cap Growth style ranks ninth in Q1'21.
  • Based on an aggregation of ratings of 27 ETFs and 497 mutual funds in the All Cap Growth style.
  • SPGP is our top-rated All Cap Growth style ETF and LSIFX is our top-rated All Cap Growth style mutual fund.
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The All Cap Growth style ranks ninth out of the twelve fund styles as detailed in our Q1'21 Style Ratings for ETFs and Mutual Funds report. Last quarter, the All Cap Growth style ranked ninth as well. It gets our Neutral rating, which is based on an aggregation of ratings of 27 ETFs and 497 mutual funds in the All Cap Growth style. See a recap of our Q4'20 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 Growth style ETFs and mutual funds are created the same. The number of holdings varies widely (from 18 to 2,345). This variation creates drastically different investment implications and, therefore, ratings.

Investors seeking exposure to the All 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 5ETF Rankings

* Best ETFs exclude ETFs with TNAs less than $100 million for inadequate liquidity.

Sources: New Constructs, LLC and company filings

Principal Quality ETF (PSET) and Siren DIVCON Leaders Dividend ETF (LEAD) 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 5Mutual Fund Rankings

* Best mutual funds exclude funds with TNAs less than $100 million for inadequate liquidity.

Sources: New Constructs, LLC and company filings

Invesco S&P 500 GARP ETF (SPGP) is the top-rated All Cap Growth ETF and ClearBridge Aggressive Growth Fund (LSIFX) is the top-rated All Cap Growth mutual fund. SPG earns a Very Attractive rating and LSIFX earns an Attractive rating.

First Trust U.S. Equity Opportunities ETF (FPX) is the worst rated All Cap Growth ETF and ACM Dynamic Opportunity Fund (ADOAX) is the worst rated All Cap Growth 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. Don’t just take our word for it, see what Barron’s says on this matter.

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 Growth ETFs and mutual funds.

Figure 3: Separating the Best ETFs from the Worst FundsETF Distribution

Sources: New Constructs, LLC and company filings

Figure 4: Separating the Best Mutual Funds from the Worst FundsMutual Fund Distribution

Sources: New Constructs, LLC and company filings

This article originally published on Jan. 20, 2021.

Disclosure: David Trainer, Kyle Guske II, Alex Sword, and Matt Shuler receive no compensation to write about any specific stock, style, or theme.

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This article was written by

David Trainer profile picture
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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. 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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