Large-Cap Growth stocks, led by tech giants, have been outperforming Large-Cap Value stocks until recently. However, there have been periods in the last three years where this trend has shifted, and historically, Large-Cap Value has proven to be the better performer since 1975. One lesser-known player in the Large-Cap Value space is the Putnam Focused Large Cap Value ETF (NYSEARCA:PVAL). DailyBubble believes that after reviewing the PVAL ETF and comparing its three-year performance against industry giants, it deserves a Buy rating for being the top performer. Investors are advised to consider other options as well.
The Putnam Focused Large Cap Value ETF, managed by Putnam Investment Management, LLC, invests in value stocks of large-cap companies within the range of the Russell 1000 Value Index. With $505 million in AUM and 56bps in fees, the ETF has a TTM Yield of 1.5%. Notably, Franklin Resources, Inc. acquired Putnam Investments on January 1, 2024.
The ETF’s strategy involves investing in large-cap companies, combining fundamental research and quantitative tools to generate alpha, focusing on companies with strong cash flows and dividend growth potential. DailyBubble sees potential in PVAL’s active strategy and considers it worth examining in detail for potential alpha generation.
The ETF’s holdings are reported based on a tracking basket methodology, with the top three sectors accounting for over 40% of the portfolio. Despite being a Large Cap Value ETF, PVAL holds both Large Cap Growth and Mid Cap Growth ETFs, which may raise questions for investors.
In terms of distributions, PVAL may not be a significant income generator, but investors are likely more interested in its potential for capital appreciation. Comparing PVAL to competitors like iShares Russell 1000 Value ETF (IWD), Invesco Large Cap Value ETF (PWV), and Fidelity Fundamental Large Cap Core ETF (FFLC), DailyBubble notes PVAL’s strong performance and advises investors to explore their options before making a decision.
DailyBubble categorizes funds as either “Core” or “Alpha,” with Core ETFs being passively managed based on an index, while Alpha ETFs aim to outperform the equivalent Core ETF through active management. For Large Cap Value funds, IWD would be considered the Core, while PVAL and other active management funds fall under the Alpha category.
In conclusion, DailyBubble sees potential in the Putnam Focused Large Cap Value ETF and suggests that investors consider it for its strong performance in the last three years. However, exploring other options like the FFLC ETF is recommended before making an investment decision.