Alpha Architect, the investment adviser and exchange traded funds issuer, said Thursday it is lowering the expense ratios on four of its quantitative factor-based funds.
That group includes the Alpha Architect Quantitative Value ETF (CBOE: QVAL), Alpha Architect’s first ETF. QVAL debuted in October 2014.
QVAL’s manageable fee will be pared to 0.49% from 0.79%. QVAL’s international counterpart, the Alpha Architect International Quantitative Value ETF (CBOE: IVAL), is getting a lower management fee of 0.59% per year, down from 0.79%.
Alpha Architect tries to eliminate any company with dubious finances or accounting schemes, along with stocks with operating cash flows that persistently fall behind net income, volatile financial statement ratios, high leverage and rapid sales growth. The remaining picks are then sorted by earnings before interest and taxes, or EBIT, over total enterprise value, or TEV. TEV is equal to market cap plus debt, minus excess cash, preferreds and minority interests
QVAL has $94.16 million in assets under management while IVAL has $88.69 million in assets, according to issuer data.
Other Fee Cuts
The Alpha Architect U.S. Quantitative Momentum ETF (CBOE: QMOM) is also seeing its management fee reduced to 0.49% from 0.79% while the Alpha Architect International Quantitative Momentum ETF (CBOE: IMOM) will charge 0.59% annually, down from 0.79%.
A “momentum” investment style emphasizes investing in securities that have had better recent total return performance compared to other securities, whereas a “value” investment style emphasizes investing in securities that based on quantitative analysis are considered undervalue compared to other securities.
QMOM and IMOM have about $131 million in combined assets under management.
“We are a PhD quant shop operating out of a garage,” said Dr. Wes Gray, founder of Alpha Architect, in a statement. “We are well positioned to provide niche, research-intensive investment products direct to the consumer at affordable costs.”
In 2018, more than 280 ETFs had fees reduced.
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