Exploring the Performance of FELV: An Actively Managed ETF Focused on Inexpensive Large-Cap Stocks
In the ever-evolving world of Exchange-Traded Funds (ETFs), the FELV ETF, which is focused on inexpensive large-cap stocks, has been generating quite a buzz since its conversion in November 2023. This actively managed fund, which aims to outperform the benchmark Russell 1000 Value Index, has managed to leave a few value-centric peers in its wake. However, it has trailed the S&P 500 ETF, which tracks the S&P 500 index, a broad measure of the US stock market.
Portfolio Composition
With a portfolio of 359 equities, FELV boasts a diverse range of holdings. One of its key holdings is BRK.B, the Class B shares of Berkshire Hathaway, which accounts for a significant portion of the fund’s assets. This holding, along with the fund’s focus on material quality stocks, contributes to its material exposure. The adjusted weighted-average earnings yield of the fund stands at a robust 5.2%.
Quality Exposure
FELV’s emphasis on material quality stocks is a strategic move that has paid off. Materials stocks, which include companies involved in the production of raw materials and commodities, have shown resilience in various economic conditions. This exposure to material quality stocks not only adds stability to the fund but also provides an opportunity for capital appreciation.
Growth Exposure: A Weakness
Despite its strong material exposure, FELV’s growth exposure is relatively subpar. This means that the fund may not perform as well during periods of strong economic growth. However, it is essential to remember that the primary objective of FELV is value investing, which focuses on buying stocks at a discount to their intrinsic value.
Impact on Individual Investors
For individual investors seeking exposure to large-cap stocks with solid fundamentals and a focus on value, FELV could be an attractive option. Its performance, while trailing the S&P 500 ETF, has outpaced several value-focused peers. Moreover, its material quality exposure adds a layer of stability to the fund.
Impact on the World
On a larger scale, the success of FELV and other value-focused ETFs could signal a shift in investor sentiment. With many investors turning to value stocks in the wake of market volatility, funds like FELV could attract more assets under management. This inflow of capital could lead to increased competition among large-cap value stocks, potentially driving up their prices and reducing their discounts to intrinsic value.
Conclusion
FELV, an actively managed ETF focused on inexpensive large-cap stocks, has shown impressive performance since its conversion in November 2023. Its strong material exposure and robust earnings yield make it an attractive option for value investors. However, its relatively weak growth exposure could limit its performance during periods of strong economic growth. For individual investors and the broader market, FELV’s success could signal a shift towards value investing and a potential increase in competition among large-cap value stocks.
- FELV is an actively managed ETF focused on inexpensive large-cap stocks
- Has outperformed several value-centric peers but trailed the S&P 500 ETF
- Key holding is BRK.B with a significant portion of assets
- Strong material exposure and robust earnings yield
- Relatively weak growth exposure
- Success could signal a shift towards value investing and increased competition among large-cap value stocks
