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Best And Worst Q4’15: Large Cap Growth ETFs, Mutual Funds And Key Holdings

Summary The Large Cap Growth style ranks fifth in Q4’15. Based on an aggregation of ratings of 24 ETFs and 604 mutual funds. QUAL is our top-rated Large Cap Growth style ETF and MIGNX is our top-rated Large Cap Growth style mutual fund. The Large Cap Growth style ranks fifth out of the twelve fund styles as detailed in our Q4’15 Style Ratings for ETFs and Mutual Funds report. Last quarter , the Large Cap Growth style ranked fourth. It gets our Neutral rating, which is based on an aggregation of ratings of 24 ETFs and 604 mutual funds in the Large Cap Growth style. See a recap of our Q3’15 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 Growth style ETFs and mutual funds are created the same. The number of holdings varies widely (from 20 to 647). This variation creates drastically different investment implications and, therefore, ratings. Investors seeking exposure to the Large 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 5 (click to enlarge) * Best ETFs exclude ETFs with TNAs less than $100 million for inadequate liquidity. Sources: New Constructs, LLC and company filings Figure 2: Mutual Funds with the Best & Worst Ratings – Top 5 (click to enlarge) * Best mutual funds exclude funds with TNAs less than $100 million for inadequate liquidity. Sources: New Constructs, LLC and company filings Destra Investment Trust II: Focused Equity Fund ( DFOIX , DFOCX ) is excluded from Figure 2 because its total net assets are below $100 million and do not meet our liquidity minimums. iShares MSCI USA Quality Factor ETF (NYSEARCA: QUAL ) is the top-rated Large Cap Growth ETF and Massachusetts Investors Growth Stock Fund (MUTF: MIGNX ) is the top-rated Large Cap Growth mutual fund. Both earn a Very Attractive rating. Columbia RP Focused Large Cap Growth ETF (NYSEARCA: RWG ) is the worst-rated Large Cap Growth ETF and Quaker Strategic Growth Fund (MUTF: QUAGX ) is the worst-rated Large Cap Growth mutual fund. RWG earns our Neutral rating while QUAGX earns our Very Dangerous rating. The Travelers Companies (NYSE: TRV ) is one of our favorite stocks held by Large Cap Growth ETFs and mutual funds and earns our Very Attractive rating. Over the past decade, Travelers has grown after-tax profits ( NOPAT ) by 14% compounded annually while improving NOPAT margins from 4% to 14%. Travelers currently earns a return on invested capital ( ROIC ) of 12%, up from 4% in 2004. Despite the stock gaining 5% year-to-date, shares remain undervalued. At its current price of $112/share, TRV has a price to economic book value ( PEBV ) ratio of 0.7. This ratio implies that the market expects Travelers NOPAT to permanently decline by 30%. If Travelers can grow NOPAT by just 1% compounded annually for the next five years , the stock is worth $172/share today – a 53% upside. Palo Alto Networks (NYSE: PANW ) is one of our least favorite stocks held by Large Cap Growth ETFs and mutual funds and earns our Very Dangerous rating. Palo Alto Networks went public in 2012 and since then its NOPAT has fallen from $2 million to -$106 million in 2015. The company currently earns a bottom quintile ROIC of -51%. Despite the downward spiral in profits, PANW has risen on investor exuberance in the cyber security sector, and shares are now significantly overvalued. To justify the current share price of $157/share, Palo Alto Networks must immediately achieve 5% pre-tax margins (-13% in 2015) and grow revenues by 31% compounded annually for the next 16 years. These expectations seem unrealistic given Palo Alto’s inability to grow profits since 2012. Figures 3 and 4 show the rating landscape of all Large Cap Growth ETFs and mutual funds. Figure 3: Separating the Best ETFs From the Worst ETFs (click to enlarge) Sources: New Constructs, LLC and company filings Figure 4: Separating the Best Mutual Funds From the Worst Funds (click to enlarge) Sources: New Constructs, LLC and company filings D isclosure: David Trainer and Thaxston McKee receive no compensation to write about any specific stock, style, or theme.

Best And Worst Q4’15: Large Cap Blend ETFs, Mutual Funds And Key Holdings

Summary The Large Cap Blend style ranks second in Q4’15. Based on an aggregation of ratings of 21 ETFs and 841 mutual funds. UDOW is our top-rated Large Cap Blend style ETF and CMIIX is our top-rated Large Cap Blend style mutual fund. The Large Cap Blend style ranks second out of the twelve fund styles as detailed in our Q4’15 Style Ratings for ETFs and Mutual Funds report. Last quarter , the Large Cap Blend style ranked second as well. It gets our Attractive rating, which is based on aggregation of ratings of 21 ETFs and 841 mutual funds in the Large Cap Blend style. See a recap of our Q3’15 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 19 to 1396). This variation creates drastically different investment implications and, therefore, ratings. Investors seeking exposure to the Large 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 (click to enlarge) * Best ETFs exclude ETFs with TNAs less than $100 million for inadequate liquidity. Sources: New Constructs, LLC and company filings The Arrow QVM Equity Factor (NYSEARCA: QVM ) and the First trust High Income ETF (NASDAQ: FTHI ) 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 (click to enlarge) * Best mutual funds exclude funds with TNAs less than $100 million for inadequate liquidity. Sources: New Constructs, LLC and company filings The Green Owl Intrinsic Value Fund (MUTF: GOWLX ) is excluded from Figure 2 because its total net assets are below $100 million and do not meet our liquidity minimums. The ProShares UltraPro Dow30 ETF (NYSEARCA: UDOW ) is the top-rated Large Cap Blend ETF and the Calvert Large Cap Core Portfolio (MUTF: CMIIX ) is the top-rated Large Cap Blend mutual fund. Both earn a Very Attractive rating. The Ark Innovation ETF (NYSEARCA: ARKK ) is the worst-rated Large Cap Blend ETF and the Lazard Enhanced Opportunities Portfolio (MUTF: LEOOX ) is the worst-rated Large Cap Blend mutual fund. Both earn a Very Dangerous rating. Wells Fargo & Company (NYSE: WFC ) is one of our favorite stocks held by CMIIX and earns our Attractive rating. Since 2010, Wells Fargo has grown after-tax profits ( NOPAT ) by 14% compounded annually, while simultaneously improving NOPAT margins from 15% to 25%. The company has improved its return on invested capital ( ROIC ) from 8% to 10% over the same timeframe. Despite the business strength, WFC has fallen 4% in the past three months, which has left shares undervalued. At its current price of $55/share, Wells Fargo has a price to economic book value ratio ( PEBV ) of 1.1. This ratio implies that the market expects Wells Fargo’s NOPAT to increase by no more than 10% over its corporate life. If Wells Fargo can grow NOPAT by just 5% compounded annually for the next decade , the stock is worth $68/share today – a 24% upside. Stratasys (NASDAQ: SSYS ) is one of our least favorite stocks held by ARKK and earns our Dangerous rating. Since Stratasys went public in 2012, its NOPAT has fallen from $19 million to -$33 million. In addition to falling profits, Stratasys currently earns a bottom quintile -9% ROIC, which is down from 1% in 2012. Despite the stock being down over 80% from its record high, Stratasys shares could fall even further as the expectations baked into the stock price remain unrealistic. To justify the current price of $23/share, Stratasys must immediately achieve 1% pre-tax margins (-40% in 2014) and grow revenues by 27% compounded annually for the next 16 years. Investors would be wise to steer clear of SSYS. 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 ETFs (click to enlarge) Sources: New Constructs, LLC and company filings Figure 4: Separating the Best Mutual Funds From the Worst Funds (click to enlarge) Sources: New Constructs, LLC and company filings D isclosure: David Trainer and Thaxston McKee receive no compensation to write about any specific stock, style, or theme.

Best And Worst Q4’15: Materials ETFs, Mutual Funds And Key Holdings

Summary The Materials sector ranks seventh in Q4’15. Based on an aggregation of ratings of 12 ETFs and 14 mutual funds. IYM is our top-rated Materials sector ETF and FSCHX is our top-rated Materials sector mutual fund. The Materials sector ranks seventh out of the 10 sectors as detailed in our Q4’15 Sector Ratings for ETFs and Mutual Funds report . Last quarter , the Materials sector ranked sixth. It gets our Neutral rating, which is based on an aggregation of ratings of 12 ETFs and 14 mutual funds in the Materials sector. See a recap of our Q3’15 Sector Ratings here . Figure 1 ranks from best to worst the nine Materials ETFs that meet our liquidity standards and Figure 2 shows the five best and worst-rated Materials mutual funds. Not all Materials sector ETFs and mutual funds are created the same. The number of holdings varies widely (from 25 to 139). This variation creates drastically different investment implications and, therefore, ratings. Investors seeking exposure to the Materials sector should buy the Attractive rated mutual fund from Figure 2. Figure 1: ETFs with the Best & Worst Ratings – Top 5 (click to enlarge) * Best ETFs exclude ETFs with TNAs less than $100 million for inadequate liquidity. Sources: New Constructs, LLC and company filings The ProShares Ultra Basic Materials ETF (NYSEARCA: UYM ), the Van Eck Market Vectors Steel Index ETF (NYSEARCA: SLX ), and the Fidelity MSCI Materials Index ETF (NYSEARCA: FMAT ) 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 (click to enlarge) * Best mutual funds exclude funds with TNAs less than $100 million for inadequate liquidity. Sources: New Constructs, LLC and company filings The Rydex Series Basic Materials Fund (MUTF: RYBOX ) (MUTF: RYBAX ) is excluded from Figure 2 because its total net assets (TNA) are below $100 million and do not meet our liquidity minimums. The iShares Dow Jones U.S. Basic Materials Index ETF (NYSEARCA: IYM ) is the top-rated Materials ETF and the Fidelity Select Chemicals Portfolio (MUTF: FSCHX ) is the top-rated Materials mutual fund. IYM earns a Neutral rating and FSCHX earns an Attractive rating. The PowerShares S&P SmallCap Materials Portfolio ETF (NASDAQ: PSCM ) is the worst-rated Materials ETF and the ICON Materials Fund (MUTF: ICBAX ) is the worst-rated Materials mutual fund. PSCM earns a Dangerous rating and ICBAX earns a Very Dangerous rating. 168 stocks of the 3000+ we cover are classified as Materials stocks. LyondellBasell Industries (NYSE: LYB ) is one of our favorite stocks held by Materials ETFs and mutual funds and earns our Attractive rating. Since 2011, Lyondell has grown after-tax profit ( NOPAT ) by 11% compounded annually. Over the same timeframe, the company has improved its return on invested capital ( ROIC ) from 17% to a top-quintile 23%. While LYB is up nearly 20% year-to-date, shares could still have large upside for long-term investors. At its current price of $93/share, LYB has a price to economic book value ( PEBV ) ratio of 1.0. This ratio implies that the market expects Lyondell’s profits to never grow from current levels. If Lyondell can grow NOPAT by just 5% compounded annually for the next five years , the stock is worth $115/share today – a 24% upside. Friedman Industries, Inc. (NYSEMKT: FRD ) is one of our least favorite stocks held by Materials ETFs and mutual funds and earns our Very Dangerous rating. Friedman’s NOPAT has rapidly declined since 2011, from $11 million to -$5 million in 2015. Friedman has also been inefficient at managing its invested capital , and its ROIC has fallen from 19% to a bottom quintile -7% over the same timeframe. Despite the struggling business, FRD has outperformed the overall market over the past six months and is now significantly overvalued. To justify the current price of $6/share, Friedman must immediately achieve positive pre-tax margins of 1%, (compared to -4% in 2015) and grow revenues by 20% compounded annually for the next 12 years . This scenario seems unlikely considering the company’s revenues and profits have only fallen over the past decade. Figures 3 and 4 show the rating landscape of all Materials ETFs and mutual funds. Figure 3: Separating the Best ETFs From the Worst ETFs (click to enlarge) Sources: New Constructs, LLC and company filings Figure 4: Separating the Best Mutual Funds From the Worst Mutual Funds (click to enlarge) Sources: New Constructs, LLC and company filings Disclosure: David Trainer and Blaine Skaggs receive no compensation to write about any specific stock, sector or theme. Editor’s Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.