Large-cap equities remained a persistently valuable theme in 2024, and their strength may very well persist heading into 2025.
As such, investors may wish to build up some additional large-cap exposure in their portfolio. However, given the crowded field of large-cap equity ETFs, it’s important to zero in on funds that stand out from the rest.
The new Oakmark U.S. Large Cap ETF (OAKM) may very well be one such fund. It leverages extensive large-cap experience from the Harris | Oakmark management team.
William Nygren, CFA, chief investment officer – U.S., partner, and portfolio manager at Harris | Oakmark, recently broke down the advantages that OAKM can offer.
Explaining OAKM’s Strategy
Nyrgen notes that Harris | Oakmark’s distinctive investment approach can help the fund stand out more. Harris | Oakmark uses a bottom-up approach to find undervalued companies that remain positioned to grow long-term. Additionally, OAKM will seek companies with management teams whose values align with those of the outside shareholders.
The size of OAKM’s portfolio is specifically cultivated to bring in the best results. Nygren adds that the fund will keep about 30-40 stocks within its portfolio. As he points out, this size offers a great middle ground between reducing risk while letting the individual stocks shine.
“I think it’s an unusually attractive time to be a value investor today,” noted Nygren. “We’re starting with such a wide spread in valuations between those handfuls of companies that have driven the S&P 500, mostly mega-cap technology companies.”
Looking closer at the S&P 500, he assessed that the P/E multiple for the S&P 500 is hovering around the low 20’s. Nygren added that this P/E multiple is roughly double that of the P/E level for Harris | Oakmark’s large-cap strategies.
“That spread is unusually wide, and we think tilts the odds in the favor of the value investor,” he said.
All of the benefits of a large-cap value strategy are only amplified by OAKM’s active management team. Active management gives the experts at Harris | Oakmark even more flexibility to adapt to changing market conditions.
OAKM is a recent release from Harris | Oakmark, launching on the NYSE on December 3. The fund has a net expense ratio of 59 basis points.
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