CornerCap debuts with active equal-weighted value-tilted US equity ETF

Aug 20th, 2020 | By | Category: Equities

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Atlanta-based investment advisor CornerCap Investment Counsel has made its ETF debut with the launch of the CornerCap Fundametrics Large Cap ETF (FUNL US) on Cboe BZX Exchange.

Cannon Carr, CEO of CornerCap Investment Counsel

Cannon Carr, CEO of CornerCap Investment Counsel

The actively managed fund invests in US large-cap equities that have been selected based on the results of a proprietary quantitative research system called “Fundametrics”.

The system makes use of more than 120 fundamental metrics to determine a company’s exposure to value, growth, growth at a reasonable price, price momentum, quality, and risk factors.

Value ranks as the most important factor in the model.

Constituent selection is guided by a composite score that aims to identify stocks considered to have the potential for positive excess returns based on relative valuation, earnings growth rates and cash flow measurements.

An overlay is applied to screen out stocks deemed to exhibit higher risk.

The fund’s manager, Jeff Moeller, director of research for CornerCap Investment Counsel, then selects stocks that score highly, while also considering overall portfolio diversification. Constituents (there are currently 129) are equally weighted.

Investors may find the equal-weighting approach a compelling antidote to the recent stock market rally, driven by the technology sector, which amplified the influence of market cap-weighted indices’ largest constituents.

Cannon Carr, CEO of CornerCap Investment Counsel, commented, “There are record numbers of new ETFs launching but they are focused on growth rather than value which is known for low price ratios and business generally trading at a discount to their fundamental outlooks. Valuation-sensitive strategies have been out of favour in recent years, but our research gives us reason to believe value, complemented by a quality overlay, is the better opportunity in the coming years.”

Jeff Moeller, Director of Research for CornerCap Investment Counsel, added, “In these unpredictable times, clients have heightened concerns and a lot of questions about what the future holds for their hard-earned money. We created a fund that positions their portfolios to potentially benefit when investors rotate to value funds. We take pride in helping clients invest for long-term success, taking into account where we believe the market is going and not solely focused on where it is today.”

The ETF comes with an expense ratio of 0.50%.

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