All Cap Growth Style 3Q18: Best and Worst

David Trainer  |


The All Cap Growth style ranks sixth out of the twelve fund styles as detailed in our 3Q18 Style Ratings for ETFs and Mutual Funds report. Last quarter, the All Cap Growth style ranked seventh. It gets our Neutral rating, which is based on an aggregation of ratings of 21 ETFs and 503 mutual funds in the All Cap Growth style. See a recap of our 2Q18 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 16 to 2021). 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.

Our Robo-Analyst technology[1] empowers our unique ETF and mutual fund rating methodology, which leverages our rigorous analysis of each fund’s holdings.[2] We think advisors and investors focused on prudent investment decisions should include analysis of fund holdings in their research process for ETFs and mutual funds.

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

Four ETFs (FQAL, PSET, MILN, QQXT) 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

Summit Global Investments Global Low Volatility Fund (SGLIX) and American Beacon Alpha Quant Quality Fund (AQQIX, AQQYX) are excluded from Figure 2 because their total net assets (TNA) are below $100 million and do not meet our liquidity minimums.

Direxion NASDAQ-100 Equal Weighted Index Shares (QQQE) is the top-rated All Cap Growth ETF and Glenmede Quantitative U.S. Large Cap Growth Equity Portfolio (GTILX) is the top-rated All Cap Growth mutual fund. QQQE earns an Attractive rating and GTILX earns a Very Attractive rating.

First Trust U.S. Equity Opportunities ETF (FPX) is the worst rated All Cap Growth ETF and Virtus Zevenbergen Innovative Growth Stock Fund (SAGAX) is the worst rated All Cap Growth mutual fund. FPX earns an Unattractive rating and SAGAX 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. 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 and provide the research needed to fulfill the fiduciary duty of care. 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 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 July 19, 2018.

Disclosure: David Trainer, Kyle Guske II, and Sam McBride receive no compensation to write about any specific stock, style, or theme.

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[1] Harvard Business School features the powerful impact of our research automation technology in the case New Constructs: Disrupting Fundamental Analysis with Robo-Analysts.

[2] Ernst & Young’s recent white paper "Getting ROIC Right" proves the superiority of our holdings research and analytics.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
BEMO Aptus Behavioral Momentum 36.43 0.36 1.00 3,391 Trade
DWLD Davis Select Worldwide ETF 25.32 0.13 0.51 3,486 Trade
FAD First Trust Multi Cap Growth AlphaDEX Fund 76.98 0.60 0.78 2,649 Trade
ONEQ Fidelity Nasdaq Composite Index Tracking Stock 313.10 2.83 0.91 13,893 Trade
PDP Invesco DWA Momentum ETF 59.68 0.56 0.94 16,894 Trade
QQEW First Trust NASDAQ-100 Equal Weighted Index Fund 63.16 0.52 0.83 2,964 Trade
FPX First Trust US Equity Opportunities 75.05 0.58 0.78 86,400
HUSE Strategy Shares US Market Rotation 41.06 0.52 1.28 320
QQQE Direxion NASDAQ-100 Equal Weighted Index Shares 47.14 0.44 0.93 6,630

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