Maryland-based Hillman Capital Management, a value-focused equity boutique, has introduced its first ETF with the launch of the ALPS Hillman Active Value ETF (HVAL US) on NYSE Arca.
The fund provides exposure to US large-cap equities aligned with quality and value factor risk premia.
The ETF, which has been brought to market in partnership with SS&C ALPS Advisors, provides actively managed exposure to a portfolio of US large-cap firms aligned with quality and value factor risk premia.
Investment strategy
The ETF is driven by the same investment philosophy that underpins the $210 million Hillman Value Fund, Hillman’s flagship mutual fund, though it exhibits a greater degree of portfolio diversification than the mutual fund and does not incorporate option writing.
Hillman first screens a universe of US-listed equities with market capitalizations above $3 billion to identify quality firms with competitive advantages. The screen primarily focuses on qualitative metrics including industry dominance, management prowess, pricing and purchasing power strength, barriers to competition, rivalry amongst competitors, brand loyalty, financial flexibility, and product quality.
The firm then aims to select approximately 45 stocks that are considered to be trading significantly below fair value based on metrics including the present value of discounted projected cash flows, price-to-book ratio, and price-to-sales ratio.
The constituents are approximately equally weighted with portfolio balancing being conducted on an as-needed basis.
The Hillman Value Fund has delivered 8.02% per annum since inception, outperforming its performance benchmark, the Russell 1000 Value Index, which returned 7.29% over the same period (data as of the end of March 2021).
Mark Hillman, CEO and CIO of Hillman Capital Management, said: “For more than 20 years, Hillman Capital has been focused on investing in quality businesses we believe possess a sustainable competitive advantage and buying these businesses at times when the markets have undervalued them. Our discipline is derived from independent research, a focus on quality enterprises, and fundamental valuation metrics within the fund strategy.”
Laton Spahr, President of SS&C ALPS Advisors, added: “ALPS Advisors is recognized for innovation and that continues with our Hillman Capital partnership. Bringing the strategy to market as an ETF may provide additional benefits and broadens access to the great tradition of Hillman Capital.”
The ETF comes with an expense ratio of 0.55%.