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ETFs and Funds Analysis

ETF Analysis

Summary

I initiate coverage of Alpha Architect U.S. Quantitative Value ETF with a 'hold' rating due to strategy concerns.

QVAL's aggressive quant screens yield deep value and high current profitability but lack a sustainable quality filter. Performance against a 3-ETF value composite was slightly underwhelming.

However, QVAL is performing well YTD. Although subject to change due to its monthly rebalancing schedule, the fund has over 50% allocated to the energy and consumer discretionary sectors.

QVAL also trades at just 11.08x forward earnings, making it one of the cheapest U.S. value ETFs on the market.

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Investment Thesis

This article initiates my coverage of the Alpha Architect U.S. Quantitative Value ETF ( QVAL ), which launched on October 21, 2014, and currently has a 0.28% expense ratio and $658 million in assets under management.…