On Tuesday, Distillate Capital ETFs, a company whose funds are designed to provide long-term investors with superior after-fee returns, announced the launch of the Distillate International Fundamental Stability & Value ETF (DSTX). The fund features stable cash flow and low leverage, with a high normalized cash yield.
DSTX seeks to track the performance of the Distillate International Fundamental Stability & Value Index. The Index seeks to include the most fundamentally stable and most undervalued stocks from a starting universe of around 1400 non-U.S. companies in developed & emerging markets. The selection criteria for the Index are based on Distillate Capital’s proprietary fundamental measures that attempt to correct the shortcomings of traditional metrics for judging the quality and value of stocks.
From Distillate, “The world economy has undergone profound changes over the last several decades, and accounting rules have not kept up. This has rendered many traditional measures of value, quality, and risk unhelpful.”
“Distillate Capital has developed customized measures of value and quality, drawing on our decades of experience as fundamental investors, that are particularly relevant to today’s long-term investors interested in international markets. We utilize these measures in our investment process to exploit behavioral biases and minimize risk by eliminating stocks that are expensive, have volatile fundamentals, or are significantly indebted.”
DSTX has an International focus, which seeks to deliver exposure to non-U.S. companies in both developed and developing international markets.
The fund’s rationally-defined value utilizes Distillate Capital’s proprietary normalized cash yield methodology, which focuses on the through-cycle durability of a company’s cash generation and indebtedness. Similarly, the rationally-defined quality focuses on long-term fundamental stability and leverage rather than short-term price volatility. And lastly, the rationally-defined risk is a combination of quality and the price paid, rather than a function of short-term stock price fluctuations.
With a net expense ratio of 0.55%, DSTX has top exposure in China, Hong Kong, Japan, and Canada, and top holdings in Alibaba, Samsung, Roche, and Nestle.
Head to Distillate Capital’s website to learn more.
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