Tag Archives: mutual funds

Best And Worst Q4’15: Mid Cap Value ETFs, Mutual Funds And Key Holdings

Summary The Mid Cap Value style ranks seventh in Q4’15. Based on an aggregation of ratings of 14 ETFs and 120 mutual funds. SYLD is our top-rated Mid Cap Value style ETF and VEVRX is our top-rated Mid Cap Value style mutual fund. The Mid Cap Value style ranks seventh out of the twelve fund styles as detailed in our Q4’15 Style Ratings for ETFs and Mutual Funds report. Last quarter , the Mid Cap Value style ranked fifth. It gets our Dangerous rating, which is based on an aggregation of ratings of 14 ETFs and 120 mutual funds in the Mid Cap Value 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 Mid Cap Value style ETFs and mutual funds are created the same. The number of holdings varies widely (from 22 to 553). This variation creates drastically different investment implications and, therefore, ratings. Investors seeking exposure to the Mid Cap Value 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 First Trust RBA Quality Income ETF (NASDAQ: QINC ) and the Direxion Value Line Mid- and Large-Cap High Dividend ETF (NYSEARCA: VLML ) 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 Cambria Shareholder Yield ETF (NYSEARCA: SYLD ) is the top-rated Mid Cap Value ETF and the Victory Sycamore Established Value Fund (MUTF: VEVRX ) is the top-rated Mid Cap Value mutual fund. SYLD earns a Very Attractive rating and VEVRX earns an Attractive rating. The PowerShares Dividend Achievers ETF (NYSEARCA: PEY ) is the worst-rated Mid Cap Value ETF and the Touchstone Mid Cap Value Fund (MUTF: TCVAX ) is the worst-rated Mid Cap Value mutual fund. PEY earns a Dangerous rating and TCVAX earns a Very Dangerous rating. Ingram Micro Inc. (NYSE: IM ) is one of our favorite stocks held by Mid Cap Value ETFs and Mutual funds and earns our Very Attractive rating. Since 2011, Ingram Micro has grown after-tax profits ( NOPAT ) by 11% compounded annually. The company has improved its return on invested capital ( ROIC ) to 8% from 6% over this same timeframe. Ingram Micro is currently undervalued given the strength of its business. At its current price of $31/share, Ingram Micro has a price to economic book value ( PEBV ) ratio of 0.9. This ratio means the market expects Ingram Micro’s profits to permanently decline by 10%. If Ingram Micro can grow NOPAT by 6% compounded annually for the next five years , the stock is worth $36/share today – a 16% upside. LendingClub Corporation (NYSE: LC ) is one of our least favorite stocks held by Mid Cap Value ETFs and mutual funds and earns our Dangerous rating. Since 2009, LendingClub’s NOPAT has fallen from -$11 million to -$22 million on a trailing twelve-month basis. The company currently earns a bottom quintile ROIC of -4% and has a -15% free cash flow yield. After falling over 40% this year, investors may think that LC presents a great value, but we think differently. The expectations baked into the stock price still imply rather extraordinary growth. To justify its current price of $12/share, LendingClub must immediately achieve pre-tax margins of 8% (-14% in 2014) and grow revenues by 29% compounded annually for the next 12 years . Figures 3 and 4 show the rating landscape of all Mid Cap Value 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 Disclosure: David Trainer and Blaine Skaggs receive no compensation to write about any specific stock, style or theme.

Long/Short Equity Funds: The Best And Worst Of October

By DailyAlts Staff Long/short equity mutual funds bounced strongly in October. Not only did the category post a 2.88% gain in the aggregate, according to Morningstar – recovering from the prior month’s 1.78% losses – but the two worst-performing long/short equity funds in September were the category’s two best performers in October. (click to enlarge) Top Performers in October The three best-performing long/short equity mutual funds in October were: The Catalyst and Tealeaf funds returned +10.71% and +9.05%, respectively, outpacing the #3 fund’s +8.73% for the month. But while the Giralda fund posted gains for the first 10 months of 2015, STVIX and LEFIX were both in the red for the longer-term period. Indeed, STVIX and LEFIX were September’s worst performers. STVIX’s 10.71% gains in October don’t quite make up for its 11.12% losses in September. The fund, which debuted in 2010 and recently had just $7.8 million in assets under management (“AUM”), lost 15.13% of its value in the first 10 months of 2015, and was down a painful 18.66% for the three months ending October 31 – despite October’s big gains. Similarly, LEFIX’s 9.05% October gains weren’t enough to make up for its 10.72% September losses. Where the fund differs from STVIX is in its one-year returns through October 31: STVIX lost 18.26% for the period, while LEFIX gained 3.43%. LEFIX launched in 2013 and recently had $2.5 million in AUM. Finally, the Giralda Manager Fund, which gained 8.73% in October, rounded out the long/short equity category’s top three for the month. With around $190 million in AUM, the fund is much larger than its counterparts, and its long-term track record is much stronger: GDAMX debuted in 2011 and had three-year annualized returns of +12.59% through October 31. (click to enlarge) Worst Performers in October The three worst-performing long/short equity mutual funds in October were: The CMG Tactical Futures Strategy Fund was the month’s worst performer, falling 6.74%. The fund is younger and much smaller than the others on this list, having debuted in 2012 and with only $7 million in AUM as of a recent filing. For the year ending October 31, the fund returned a devastating -25.72%. Its three-year annualized returns through that date stood at -10.43%. Unlike the CMG fund, the Highland and Turner funds have much better longer-term returns, despite October’s poor performance. HHCAX lost 5.54% and TMSEX lost 4.99% in October, but the funds had respective three-year annualized returns of +13.59% and +11.67% for the period ending October 31. Both funds are rated “5-stars” by Morningstar, and had comparatively large AUM of $802.3 million [HHCAX] and $133.2 million [TMSEX], as of a recent filing. (click to enlarge) September’s Best and Worst: Follow-Up September’s top-performing long/short equity mutual funds included the LJM Preservation and Growth Fund (MUTF: LJMIX ), the AQR Long-Short Equity Fund (MUTF: QLEIX ), and the Longboard Long/Short Equity Fund (MUTF: LONGX ), with respective one-month gains of 5.25%, 3.98%, and 3.47%. In October, the funds returned -1.44%, +5.25%, and +2.54%, respectively. The Catalyst Hedged Insider Buying and Tealeaf Long/Short Deep Value funds were September’s worst performers at -11.12% and -10.72%, respectively. They bounced back to be October’s best performers, as detailed earlier in the article. The third member of last month’s triumvirate, the Goldman Sachs Long Short Fund (MUTF: GSLSX ) – which lost 7.45% in September – returned -3.74% in October, continuing its underperformance. Past performance does not necessarily predict future results.

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

Summary The Mid Cap Growth style ranks ninth in Q4’15. Based on an aggregation of ratings of 10 ETFs and 343 mutual funds. RFG is our top-rated Mid Cap Growth style ETF and CCPIX is our top-rated Mid Cap Growth style mutual fund. The Mid Cap Growth style ranks ninth out of the twelve fund styles as detailed in our Q4’15 Style Ratings for ETFs and Mutual Funds report. Last quarter , the Mid Cap Growth style ranked eighth. It gets our Dangerous rating, which is based on an aggregation of ratings of 10 ETFs and 343 mutual funds in the Mid Cap Growth style. See a recap of our Q3’15 Style Ratings here. Figure 1 ranks from best to worst all ten Mid Cap Growth ETFs and Figure 2 shows the five best and worst-rated Mid Cap Growth mutual funds. Not all Mid Cap Growth style ETFs and mutual funds are created the same. The number of holdings varies widely from 23 to 573. This variation creates drastically different investment implications and, therefore, ratings. Investors seeking exposure to the Mid 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 The Virtus Equity Trust Mid-Cap Core (VIMCX, VMCCX) and the Professionally Managed Portfolios Villere Equity Fund (MUTF: VLEQX ) are excluded from Figure 2 because their total net assets are below $100 million and do not meet our liquidity minimums. The Guggenheim S&P MidCap 400 Pure Growth ETF (NYSEARCA: RFG ) is the top-rated Mid Cap Growth ETF and the Calvert World Values Capital Accumulation Fund (MUTF: CCPIX ) is the top-rated Mid Cap Growth mutual fund. RFG earns an Attractive rating and CCPIX earns a Very Attractive rating. The Ark Industrial Innovation ETF (NYSEARCA: ARKQ ) is the worst-rated Mid Cap Growth ETF and the Tocqueville Opportunity Fund (MUTF: TOPPX ) is the worst-rated Mid Cap Growth mutual fund. ARKQ earns a Neutral rating and TOPPX earns a Very Dangerous rating. Lear Corporation (NYSE: LEA ) is one of our favorite stocks held by Mid Cap Growth ETFs and mutual funds and earns an Attractive rating. Since going public in 2010, Lear has grown after-tax profits ( NOPAT ) by 7% compounded annually. The company has maintained NOPAT margins ~5% and currently earns a top quintile return on invested capital ( ROIC ) of 17%. Such strong fundamentals have propelled Lear shares over 20% higher this year, but shares still remain undervalued. At its current price of $125/share, LEA has a price to economic book value ( PEBV ) ratio of 1.1. This ratio implies the market expects Lear to only grow NOPAT by 10% for the remainder of its corporate life. If Lear can grow NOPAT by just 8% compounded annually for the next decade , the stock is worth $174/share today – a 39% upside. CoStar Group Inc. (NASDAQ: CSGP ) is one of our least favorite stocks held by Mid Cap Growth ETFs and mutual funds and earns a Dangerous rating. Despite reporting positive and increasing net income over the past five years, CoStar’s economic earnings have fallen from -$3 million in 2010 to -$131 million on a TTM basis. The company’s ROIC has fallen from 9% to a bottom quintile 1% over this same timeframe. CSGP is up ~3% year-to-date and is currently overvalued given its deteriorating business operations. To justify its current price of $204/share, CoStar must grow profits by 20% compounded annually for the next 19 years. With such lofty expectations baked into the stock price investors would be wise to avoid CSGP. Figures 3 and 4 show the rating landscape of all Mid 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 Blaine Skaggs receive no compensation to write about any specific stock, style, or theme.