{"id":3162,"date":"2023-06-26T17:17:24","date_gmt":"2023-06-26T17:17:24","guid":{"rendered":"http:\/\/blog.valuengine.com\/?p=3162"},"modified":"2023-06-26T17:17:24","modified_gmt":"2023-06-26T17:17:24","slug":"how-have-expert-stock-selection-etfs-performed-in-this-decade-thus-far","status":"publish","type":"post","link":"http:\/\/blog.valuengine.com\/index.php\/how-have-expert-stock-selection-etfs-performed-in-this-decade-thus-far\/","title":{"rendered":"How Have Expert Stock Selection ETFs Performed in this Decade Thus Far?"},"content":{"rendered":"

Throughout my career, I\u2019ve heard professional investors assert that index funds are fine for bull markets but in volatile-to-down markets, active management will outperform.\u00a0 SPIVA (S&P vs. Global) published research available from S&P Global has demonstrated that this was not true for actively managed mutual funds for 2022, and less true for the 2020-2022 period.\u00a0 I take that with a grain of salt because it compares an index to traditional mutual funds that have a costly structure.\u00a0\u00a0<\/span><\/p>\n

In my article available on the ValuEngine website, I explain why the redeem-at-distributor model costs investors in the average equity mutual fund more than 2.0% in return per year.\u00a0 I believe the fair comparison is actively managed ETFs to an efficient S&P 500 ETF such as iShares\u2019 <\/span>IVV<\/b> or Vanguard\u2019s <\/span>VOO.\u00a0 <\/b>Once the structure issue is neutralized, then it is a fair comparison.\u00a0 Although actively managed ETFs are one of the two fastest growth areas in the industry, many have short histories as the trend toward well-known managers providing active selection in the ETF structure did not really get going until the last few years.\u00a0 Prior to that, a few \u201csmart stock selection\u201d ETFs \u201cindexized\u201d expert stock selection.\u00a0 This week, we look at two of those ETFs along with two actively managed ETFs that follow quantitative disciplines.\u00a0 The common theme is expert stock selection.<\/span><\/p>\n

All 5,000 stocks, 16 sector groups, 140 industries, and 500 ETFs have been updated.<\/b><\/h5>\n
Two week free trial:<\/b> www.ValuEngine.com<\/b><\/a><\/h5>\n

The ETFs, listed by ticker symbol, include:<\/span><\/p>\n

GURU – Global X Guru Index ETF<\/b><\/p>\n

GURU selects firms using a copycat approach, piggybacking on accomplished stock-pickers. The fund’s index looks at published holdings of large hedge funds, focusing on those with concentrated stakes in US-listed securities. Securities selected in this manner are equally weighted. GURU’s free-riding method is intuitive and transparent, but <\/span>basing a portfolio on lagged quarterly snapshots of nimble hedge funds also comes with difficulties<\/b>. The index is reconstituted annually and rebalanced quarterly.<\/span><\/p>\n

GFGF- Guru Favorite Stocks ETF<\/b><\/p>\n

GFGF invests in US stocks that are favored by prominent long-term investors. The subadvisor selects around 20 investors or gurus with publicly available track records of at least 10 years. From an initial universe of US-listed companies based on the publicly available information and 13F filings, the fund screens out companies with market-cap below $1 billion. Securities are ranked by the number of gurus investing in a particular security, regardless of the size of holdings. The subadvisor will recommend approximately 25-30 stocks based on their determined ranking with consideration to quality or value. A stock\u2019s quality and value is determined by using various financial measurements. GFGF takes a long-term investment view and recommends changes to the portfolio near the beginning and the middle of each year. <\/span>As an actively managed fund, the portfolio managers can analyze market and financial data to make buy, sell, and hold decisions at their discretion.<\/b><\/p>\n

JOET \u2013 Virtus Terranova U.S. Quality Momentum ETF \u2013\u00a0<\/b><\/p>\n

JOET tracks the Terranova U.S. Quality Momentum Index, which aims to combine strong quality fundamentals with positive momentum technical trends. Constituent eligibility begins with the 500 largest US securities by market capitalization, which are then screened and ranked based on a momentum and quality score based on the following factors: (i) return-on-equity, (ii) debt-to-equity, and (iii) sales growth rate. A composite score is then calculated and assigned wherein the top 125 securities with positive momentum form the Underlying Index. Finally, the fund is equally-weighted at every quarterly rebalance and reconstitution. <\/span>JOET\u2019s underlying index is the brainchild of Joe Terranova, Senior Managing Director and Chief Market Strategist for Virtus Investment Partners. His market expertise and investing principles are utilized in the index methodology.<\/b><\/p>\n

SYLD \u2013 Cambria Shareholder Yield ETF \u2013\u00a0<\/b><\/p>\n

SYLD actively selects US stocks that exhibit high shareholder yield which is calculated by considering cash flow measures. Selection starts with the top 20% stocks by combining <\/span>two popular themes \u2014 dividend payments and share buybacks.<\/b> The fund\u2019s quantitative algorithm then factors in the debt paydowns of the remaining stocks and applies valuation factors. The top 100 stocks that represent the best combination of shareholder yield characteristics and value metrics form the final portfolio. <\/span>Cambria ETFs <\/b>are all actively managed under the aegis of Barron\u2019s Investment Roundtable Member, Mebane Faber.<\/span><\/p>\n

The benchmark indexes and ETFs included here are:<\/span><\/p>\n

    \n
  1. The S&P 500 Index representing US Large Cap, the ETF is iShares\u2019 <\/span>IVV.\u00a0<\/b><\/li>\n
  2. The Nasdaq-100, the ETF is Invesco <\/span>QQQ<\/b>.\u00a0<\/span><\/li>\n<\/ol>\n
    Current ValuEngine reports on these stocks or ETFS can be viewed<\/b> HERE<\/b><\/a><\/h5>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
    \u00a0<\/span><\/td>\nGURU<\/b><\/td>\nGFGF<\/b><\/td>\nJOET<\/b><\/td>\nSYLD<\/b><\/td>\nQQQ<\/b><\/td>\nIVV<\/b><\/td>\n<\/tr>\n
    Fund Name<\/span><\/td>\nGlobal X Guru Index ETF<\/span><\/td>\nGuru Favorite Stocks ETF<\/span><\/td>\nTerranova U.S. Quality Momentum Index<\/span><\/td>\nCambria Shareholder Yield ETF<\/span><\/td>\nNASDAQ-100 Index<\/span><\/td>\nS&P 500<\/span><\/td>\n<\/tr>\n
    ValuEngine Rating<\/span><\/td>\n4<\/span><\/td>\n4<\/span><\/td>\n3<\/span><\/td>\n1<\/span><\/td>\n3<\/span><\/td>\n3<\/span><\/td>\n<\/tr>\n
    Forecast 3-mo. Price Return<\/span><\/td>\n1.66%<\/span><\/td>\n3.04%<\/b><\/td>\n1.84%<\/span><\/td>\n-0.24%<\/span><\/td>\n3.02%<\/span><\/td>\n2.17%<\/span><\/td>\n<\/tr>\n
    Forecast 1-yr. Price Return<\/span><\/td>\n0.13%<\/span><\/td>\n0.38%<\/b><\/td>\n-0.77%<\/span><\/td>\n-5.90%<\/span><\/td>\n-1.22%<\/span><\/td>\n-1.01%<\/span><\/td>\n<\/tr>\n
    Historic 1 mo. Price Return<\/span><\/td>\n2.86%<\/span><\/td>\n5.71%<\/span><\/td>\n2.50%<\/span><\/td>\n5.96%<\/i><\/b><\/td>\n10.22%<\/b><\/td>\n4.29%<\/span><\/td>\n<\/tr>\n
    Historic 3 mo. Price Return<\/span><\/td>\n3.16%<\/span><\/td>\n6.63%<\/i><\/b><\/td>\n2.55%<\/span><\/td>\n6.30%<\/span><\/td>\n21.13%<\/b><\/td>\n9.44%<\/span><\/td>\n<\/tr>\n
    Historic 6 mo. Price Return<\/span><\/td>\n2.10%<\/span><\/td>\n6.58%<\/i><\/b><\/td>\n0.46%<\/span><\/td>\n2.48%<\/span><\/td>\n25.69%<\/b><\/td>\n8.99%<\/span><\/td>\n<\/tr>\n
    Historic 12-month Price Return<\/span><\/td>\n-3.69%<\/span><\/td>\n7.91%<\/i><\/b><\/td>\n4.16%<\/span><\/td>\n5.57%<\/span><\/td>\n18.40%<\/b><\/td>\n7.10%<\/span><\/td>\n<\/tr>\n
    Historic 3-Yr. Ann. Price Return 3.23%<\/span><\/td>\n3.23%<\/span><\/td>\nN\/A<\/span><\/td>\nN\/A<\/span><\/td>\n25.01%<\/b><\/td>\n16.47%<\/span><\/td>\n18.70%<\/span><\/td>\n<\/tr>\n
    Historic 5-Yr Ann. Price Return<\/span><\/td>\n2.07%<\/span><\/td>\nN\/A<\/span><\/td>\nN\/A<\/span><\/td>\n11.47%<\/i><\/b><\/td>\n14.32%<\/b><\/td>\n8.61%<\/span><\/td>\n<\/tr>\n
    2022<\/span><\/td>\n-27.94%<\/span><\/td>\n-20.32%<\/span><\/td>\n-18.04%<\/span><\/td>\n-6.12%<\/b><\/td>\n-32.58%<\/span><\/td>\n-18.17%<\/span><\/td>\n<\/tr>\n
    2021<\/span><\/td>\n8.14%<\/span><\/td>\nN\/A<\/span><\/td>\n26.80%<\/span><\/td>\n48.30%<\/b><\/td>\n27.42%<\/span><\/td>\n28.75%<\/span><\/td>\n<\/tr>\n
    2020<\/span><\/td>\n25.23%<\/i><\/b><\/td>\nN\/A<\/span><\/td>\nN\/A<\/span><\/td>\n13.53%<\/span><\/td>\n48.62%<\/b><\/td>\n18.37%<\/span><\/td>\n<\/tr>\n
    Volatility<\/span><\/td>\n21.51%<\/span><\/td>\n22.89%<\/span><\/td>\n18.74%<\/b><\/td>\n28.03%<\/span><\/td>\n22.30%<\/span><\/td>\n18.89%<\/span><\/td>\n<\/tr>\n
    Sharpe Ratio\u00a0<\/span><\/td>\n0.1<\/span><\/td>\n-0.5<\/span><\/td>\n0.15<\/span><\/td>\n0.25<\/i><\/b><\/td>\n0.64<\/b><\/td>\n0.46<\/span><\/td>\n<\/tr>\n
    Beta<\/span><\/td>\n1.07<\/span><\/td>\n1.08<\/span><\/td>\n1.02<\/i><\/b><\/td>\n1.24<\/span><\/td>\n1.1<\/span><\/td>\n1.00<\/b><\/td>\n<\/tr>\n
    # of Stocks<\/span><\/td>\n66<\/span><\/td>\n28<\/span><\/td>\n126<\/i><\/b><\/td>\n102<\/span><\/td>\n100<\/span><\/td>\n500<\/b><\/td>\n<\/tr>\n
    Undervalued by VE %<\/span><\/td>\n41%<\/b><\/td>\n19%<\/span><\/td>\n26%<\/span><\/td>\n40%<\/span><\/td>\n30%<\/span><\/td>\n35%<\/span><\/td>\n<\/tr>\n
    P\/B Ratio<\/span><\/td>\n2.8<\/span><\/td>\n5.7<\/span><\/td>\n4.5<\/span><\/td>\n1.7<\/b><\/td>\n6.8<\/span><\/td>\n4.0<\/span><\/td>\n<\/tr>\n
    P\/E Ratio<\/span><\/td>\n20.5<\/span><\/td>\n23.6<\/span><\/td>\n17.2<\/span><\/td>\n6.4<\/b><\/td>\n29.8<\/span><\/td>\n20.7<\/span><\/td>\n<\/tr>\n
    Div. Yield<\/span><\/td>\n0.2%<\/span><\/td>\n0.4%<\/span><\/td>\n1.2%<\/span><\/td>\n2.9%<\/b><\/td>\n0.6%<\/span><\/td>\n1.5%<\/span><\/td>\n<\/tr>\n
    Expense Ratio<\/span><\/td>\n0.65%<\/span><\/td>\n0.65%<\/span><\/td>\n0.29%<\/i><\/b><\/td>\n0.59%<\/span><\/td>\n0.20%<\/span><\/td>\n0.03%<\/b><\/td>\n<\/tr>\n
    Assets Under Management (AUM) in Millions<\/span><\/td>\n47<\/span><\/td>\n31<\/span><\/td>\n106<\/span><\/td>\n732<\/span><\/td>\n187,000<\/span><\/td>\n310,000<\/span><\/td>\n<\/tr>\n
    Largest Holding Pct.<\/span><\/td>\nNVIDIA (1.94%)<\/span><\/td>\nMicrosoft Corp (13.79%)<\/span><\/td>\nNVIDIA (1.12%)<\/span><\/td>\nMcKesson Corp (1.83%)<\/span><\/td>\nMicrosoft Corp (13.20%)<\/span><\/td>\nApple Inc (7.46%)<\/span><\/td>\n<\/tr>\n
    Index Provider<\/span><\/td>\nSolactive<\/span><\/td>\nNone – Active<\/b><\/td>\nWall Street. Indxx, LLC<\/span><\/td>\nNone – Active<\/b><\/td>\nNasdaq<\/span><\/td>\nS&P Global<\/span><\/td>\n<\/tr>\n
    ETF Sponsor<\/span><\/td>\nGlobal X ETFs<\/span><\/td>\nAlpha Architect<\/span><\/td>\nVirtus Investment Partners<\/span><\/td>\nCambria<\/span><\/td>\nInvesco<\/span><\/td>\niShares<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

    All data as of 6\/17\/2023 \u2013 Best scores in bold; Best expert fund scores in bold italics when index scores are higher.\u00a0 Data from ValuEngine and VettaFI\u2019s ETFdb.com .<\/span><\/p>\n

    Current ValuEngine reports on these stocks or ETFS can be viewed<\/b> HERE<\/b><\/a><\/h5>\n

    <\/b>Observations:<\/b><\/b><\/p>\n