Q4 2022 Style Standards for ETFs and Mutual Funds | Jobs Vox

In the fourth quarter of 2022, the large-cap value, all-cap value, and all-cap mixed styles will earn attractive or better ratings. Our style ratings are based on common fund ratings for each exchange-traded fund (“ETF”) and mutual fund. given style. Our fund ratings are based on the sum of the ratings of the stocks it holds.

Investors looking for style funds that hold quality stocks should focus on large-cap value, all-cap value and all-cap mixed styles. Figures 4 through 7 provide more details on overall patterns, underlying assets, and levels of individual funds. The main driver behind attractive fund ratings is good portfolio management or good stock picking with low total annual expenses.

Attractive-or-better ratings don’t always correspond to attractive-or-better total annual costs. This fact emphasizes that: (1) cheap funds can deceive investors; and (2) investors should invest only in funds with good stocks and low fees.

See Figures 4 to 13 for a detailed breakdown of ratings by investment style.

Figure 1: Levels for all investment styles

To be attractive or better projected, an ETF or mutual fund should have high-quality holdings and low expenses. Only the top 30% of all ETFs and mutual funds earn our attractive-or-better rating.

Artisan Global Value Fund (APHGX) is a highly rated large cap value fund that meets our small cap. It earns our Most Attractive rating, with more than 47% of its value allocated to attractive or better-rated stocks.

Dunham Small Cap Growth Fund (DADGX) is the worst rated small cap growth fund. It earns our most unattractive rating, with more than 36% of its value allocated to attractive- or worse-rated stocks. Worse, it charges investors a total annual fee of 5.15 percent.

Figure 2 shows the distribution of our forecast ratings for all investment types of ETFs and mutual funds.

Figure 2: Distribution of ETFs and mutual funds (assets and inventory) by pre-rating.

Figure 3 provides more details on the quality of investment-type funds. Note that the total annual cost of the least attractive funds is almost four times that of the most attractive funds.

Figure 3: Estimated ranking statistics

* Average TAC = weighted average total annual costs

This chart shows that only the best funds get our most attractive rating: they should hold good stocks and have low expenses. Investors deserve the best of both, and we’re here to give it to them.

Ratings given by investment style

Figure 4 maps the most attractive funds by investment style. The table shows the most attractive funds in each style and the percentage of assets allocated to funds rated most attractive.

Figure 4: The most attractive ETFs and mutual funds by investment style

Figure 5 presents the data set in Figure 4.

Figure 5: The most attractive ETFs and mutual funds by investment style

Figure 6 maps attractive funds by investment style. The table shows the number of attractive funds in each style and the percentage of assets allocated to attractively rated funds.

Figure 6: Attractive ETFs and mutual funds by investment style

Figure 7 presents the data plotted in Figure 6 .

Figure 7: Attractive ETFs and mutual funds by investment style

Figure 8 maps sovereign funds by investment style. The table shows the number of neutral funds in each style and the percentage of assets allocated to neutrally rated funds.

Figure 8: Independent ETFs and mutual funds by investment style

Figure 9 presents the data set in Figure 8.

Figure 9: Independent ETFs and mutual funds by investment style

Figure 10 shows a map of unattractive funds by investment style. The table shows the number of unattractive funds in each style and the percentage of assets allocated to attractively rated funds.

The landscape of style ETFs and mutual funds is littered with unattractive funds. Small-cap growth investors put more than 64% of their assets in unattractive rated funds.

Figure 10: Unattractive ETFs and mutual funds by investment style

Figure 11 presents the data plotted in Figure 10 .

Figure 11: Unattractive ETFs and mutual funds by investment style

Figure 12 provides a map of the most unattractive funds by investment style. The table shows the number of unattractive funds in each style and the percentage of assets allocated to the most attractive-rated funds.

Figure 12: Most unattractive ETFs and mutual funds by investment style

Figure 13 presents the data set in Figure 12.

Figure 13: Most Unattractive ETFs and Mutual Funds by Investment Style

This article was originally published by October 18, 2022.

Disclosure: David Coach, Kyle Guske II and Matt Shuler receive no compensation for writing about any particular stock, sector or theme.