For many investors, it is easy to think of active management as available only through a mutual fund wrapper with a grizzled team of analysts and portfolio managers.
Meanwhile, ETFs are usually thought of just tracking a well-known benchmark such as the S&P 500 index or the Bloomberg Barclays Aggregate index. Yet, just as there long have been index-based mutual funds from Vanguard, Fidelity and others, increasingly well-known active managers have launched their best ideas in an ETF wrapper and seeking to outperform an index.
Davis Advisors, which has long offered a suite of strong-performing, bottom-up driven U.S. and global equity mutual funds, launched three equity ETFs in January 2017. At the Inside ETF Conference in late January, CFRA spoke with Chris Davis, chairman and portfolio manager of Davis Advisors, about why the firm entered the ETF market. Davis explained that the ETF wrapper enabled the asset management company to combine the low-cost, transparent benefits of an ETF with the attributes of true active management, such as flexibility, accountability and the opportunity to outperform. To watch the CFRA interview with Davis on video, check out https://newpublic.cfraresearch.com/davis_actively_managed_etfs/.
Davis himself is a co-manager of Selected American Shares (SLADX), a CFRA four-star rated mutual fund whose 22.2% total return was in the minority of large-cap core mutual funds to outperform the S&P 500 index in 2017. SLADX’s rating and record is aided by its below-average 0.65% expense ratio. The fund recently held 51 positions with the top-10 holdings comprising 49% of assets. Davis Select USA Equity ETF (DUSA) is a more concentrated version of SLADX with just 21 holdings and the top-10 comprising 68% of assets.
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