DVAL: Quality Isn't Enough To Be The Best Value ETF

2025-02-01 23:24:54 ET

Summary

• DVAL is an actively managed large-cap value ETF with a 0.49% expense ratio and an excellent long-term track record outperforming the Russell 1000 Value Index.
• The fund's management team is experienced and has managed DVAL and its predecessor private fund since 2007. They strive to select high-quality stocks with attractive valuations and positive sentiment features.
• However, my fundamental analysis reveals weaknesses in sentiment and some red flags on growth and momentum. In particular, DVAL no longer offers a competitive sales and earnings growth rate.
• Due to DVAL's consistent emphasis on quality, I have little doubt it will continue to outperform its benchmark over the long run. However, I believe there are several superior alternatives.
• I'll highlight three of them today: VTV, FELV, and FLCV. Each offers substantially greater expected earnings growth, and also doesn't rank too poorly on other key factors, including quality and value.

Investment Thesis

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