A Solid Start For A New Active ETF
Actively managed exchange traded funds still represent just a sliver of overall ETF assets in the U.S., but several of this year's most successful new ETFs are active funds.
That group includes the Davis Select U.S. Equity ETF (NASDAQ:DUSA), which debuted in January courtesy of New York-based Davis Investment Advisors. The money management firm is over 45 years old and had $25 billion in assets under management at the end of last year.
DUSA is managed by Chris Davis and his partner Danton Goei. With over $32 million in assets under management, easily enough to call it a success among 2017's rookie ETFs, DUSA is concentrated ETF with just 21 holdings.
“Since Davis is by nature an actively managed shop, it is safe to say that all three of these ETFs join the growing list of actively managed strategies in the marketplace as well, and also demonstrates to us yet another well-known mutual fund/SMA manager entering the ETF party,” Street One Financial Vice President Paul Weisbruch said in a note out Tuesday.
DUSA allocates 52.7 percent of its combined weight to financial services and industrial stocks. By comparison, the S&P 500 devotes just over 24 percent combined to those two sectors. Consumer discretionary and energy stocks combine for 26.1 percent of DUSA's weight. The ETF can hold between 15 and 35 components.
“Davis Advisors conducts extensive research to try to identify businesses that possess characteristics that they believe foster the creation of long-term value, like proven management, durable franchise and business model, and sustainable competitive advantages, along with targeting in those that are trading at discounts to their intrinsic value,” according to ETF Trends.
The Davis team emphasizes other fundamental factors, including cash flow and debt, when selecting DUSA's member firms.
Top 10 holdings in the new ETF include Berkshire Hathaway Inc. (NYSE: BRK-B), Amazon.com Inc. (NASDAQ:AMZN) and Alphabet Inc. (NASDAQ:GOOG). Those stocks combine for a quarter of the new ETF's weight.
DUSA charges 0.6 per year, or $60 on a $10,000 investment.
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