On July 22, Hotchkis & Wiley premiered ETF share classes for two of its existing strategies. The Hotchkis & Wiley International Value Fund (HWIV) and the Hotchkis & Wiley Opportunities Fund (HWO) come to market with expense ratios of 70 and 90 basis points, respectively. These funds enable investors to access the same underlying pool of assets as the firm’s existing mutual funds, while allowing the flexibility for intraday trading and the tax efficiency of an ETF wrapper.
Key Takeaways
- Hotchkis & Wiley has introduced ETF share classes for its Hotchkis & Wiley International Value Fund (HWIV) and the Hotchkis & Wiley Opportunities Fund (HWO), bringing the firm’s total number of ETF offerings to three.
- These new share classes provide investors with the same underlying asset exposure as the firm’s existing mutual funds, while adding the benefits of intraday trading and the potential tax efficiency of an ETF wrapper.
- HWIV targets 40–80 attractively valued international companies excluding the U.S. Meanwhile, HWO maintains a portfolio of 45–75 holdings believed to be undervalued.
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Targeting Global Value & Special Situations
Through an actively managed approach, HWIV targets 40–80 attractively valued companies located outside the U.S., prioritizing durable business models and shareholder-friendly management. The fund currently maintains large allocations to financials, with a 17.7% portfolio weight, and industrials, with a 14.3% weight.
HWO maintains a portfolio of 45–75 undervalued issuers. It opportunistically invests in special situations such as merger arbitrage, bonds and preferred stock. The fund is heavily weighted toward the information technology sector, with a 27.2% portfolio weight. The fund’s top holding, Workday Inc. (WDAY), currently sits at a 11.7% weight. Despite Workday’s decline of approximately 34% in 2026, the firm consistently reports accelerating revenue and attractive free cash flow growth. That positions it as a potentially undervalued company for HWO’s strategy.
Delivering Returns in a New Wrapper
International equities have seen strong performance over the past year. However, HWIV’s returns come down to the fund’s concentrated high-conviction stock selections. HWIV delivered an annualized three-year return of 22.2% as of June 30. This return exceeds that of broad global market indexes like the VettaFi Full World Ex US Index, which has an annualized three-year return of 19.5% over the same period.
HWO saw a 15.4% annualized three-year return as of June 30. The funds’ heavy concentration in issuers deemed undervalued by the firm has driven its performance. Its return lags behind broad market value indexes such as the VettaFi US Enhanced Value Index, which has delivered a three-year annualized return of 19.5% over the same timeframe.
The launch of HWIV and HWO builds upon the firm’s first standalone ETF, the Hotchkis & Wiley SMID Cap Diversified Value Fund (HWSM). HWSM primarily invests in undervalued small- and mid-cap U.S. equities. Hotchkis & Wiley now manages three ETF offerings, granting investors the flexibility to access the firm’s actively managed strategies in a transparent ETF wrapper.
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