On Monday, Matrix Asset Advisors debuted the Matrix Advisors Value ETF (MAVF).
MAVF is an actively managed ETF that looks to provide strong total return for its investors. This return is derived from both capital appreciation and current income. The fund operates with a net expense ratio of 75 basis points.
At least 80% of the total assets for MAVF will be invested in U.S. companies. MAVF mostly targets its investments toward large-cap stocks. This includes both dividend and nondividend-paying companies.
Emphasizing Value
When it comes to choosing companies to invest in, Matrix looks to build a portfolio focused on value. To do so, the fund uses what Matrix calls “Classic Valuation Analysis.”
Matrix’s take on Classic Valuation Analysis is derived from theories that Benjamin Graham, the “father of value investing,” developed nearly a decade ago. That said, Matrix has updated these principles to account for shifting macroeconomic trends as time has passed.
This analysis principle examines a number of different value-focused factors to determine a company’s intrinsic value. This includes examining earnings growth, return on equity, dividend growth, and book value, among others. From there, these factors are compared to valuation levels from both the past and the future.
Looking to the past, companies under consideration will have their valuations compared to levels from the past six to 10 years. From there, current valuations will then be assessed alongside projected levels from the next two years.
Per the fund prospectus, companies within MAVF’s portfolio would likely be sold for three reasons. A stock may be sold if it either reaches its intrinsic value or experiences a shift that knocks the security out of MAVF’s valuation criteria. Additionally, securities may be sold if the fund wants to opt for a more attractive alternative.
Given that uncertainty has remained a fairly consistent theme this year, investors may wish to opt for active management for their value strategies. Active managers may be in a better position to capitalize on trends or shield the fund from downturn.
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