Distillate US Fdmtl Stblty & Val ETF earns a Morningstar Medalist Rating of Neutral with strength in areas such as Process offset by weaker spots such as People. The portfolio maintains a cost advantage over competitors, priced within the second-cheapest fee quintile among peers.  

 The longest-tenured manager is experienced, but other weaknesses limit the strategy to a Below Average People Pillar rating. The strategy's sensible investment philosophy earns an Above Average Process Pillar rating.  High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And a high yield exposure is rooted in holding high dividend-paying or buyback stocks. The strategy is part of a first-rate parent that has substantial personal investments from managers and overall affordable fees. These attributes support its Above Average Parent Pillar rating.

Analyst Rating

UnitedHealth Group

Johnson & Johnson

Alphabet

AbbVie

T-Mobile US

Amgen

Philip Morris

Comcast

QUALCOMM

Cisco Systems

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. Distillate US Fdmtl Stblty & Val ETF earns an Above Average Process Pillar rating. 

The leading factor in the rating is the parent firm's five-year risk-adjusted success ratio of 100%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. Strong risk-adjusted performance also influences the rating. This can be seen in the fund's five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. Lastly, the process is limited by being an actively managed strategy. Historical data, such as Morningstar's Active/Passive Barometer, finds that actively managed funds have generally underperformed their passive counterparts, especially over longer time horizons.

 This strategy leans toward smaller, more undervalued companies than its average peer in the Large Blend Morningstar Category. Analyzing additional factors, the fund has held stocks with higher trading volumes compared to Morningstar Category Peers in the past few years. Such stocks may have less potential upside than illiquid holdings, but they are easier to trade during market downturns. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. The managers have also tended to overweight yield during recent years, shown by the portfolio's high exposure to dividends or buybacks. High-yield stocks tend to be associated with more mature, profitable businesses that can grow as well as provide a stream of income. Such stocks could suffer, however, if setbacks force them to cut their dividends. Compared with category peers, the strategy also had more exposure to the Yield factor in the most recent month. Additionally, this strategy has demonstrated a bias away from momentum stocks during these years. Momentum investors tend to expect stocks that have done well recently to continue to do so in the short term. Momentum approaches can entail higher turnover and trading costs since the top stocks can often change. In recent months, the strategy also had less Momentum factor exposure than its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in healthcare and industrials relative to the category average by 11.1 and 9.7 percentage points, respectively. The sectors with low exposure compared to category peers are technology and financial services, underweight the average by 12.5 and 6.9 percentage points of assets, respectively. The portfolio is positioned across 102 holdings and its assets are more dispersed than peers in the category. In particular, 20.2% of the fund’s assets are concentrated in the top 10 fund holdings, as opposed to the category average's 49.5%.

Above Average

Process

Distillate US Fdmtl Stblty & Val ETF earns a Below Average People Pillar rating. The team is strengthened by the strategy's costs, which rank in its category's second cheapest quintile. A higher expense ratio reduces net returns, so low costs give this team an advantage. However, the rating is limited by the turnover of talent across its parent firm. The firm's asset-weighted manager tenure of six years suggests it could do more to retain portfolio managers. The combined average three-year excess return of each manager also holds the rating back. It suggests that the funds they manage have lagged their respective category's average return.


Austin Wen, the longest-tenured manager, has six years of listed portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 2.7 stars, indicating that their risk-adjusted returns have been in line with the category average. The team boasts an experienced corps of listed portfolio managers, with three others supporting Austin Wen. Together, they average 12 years of listed portfolio management experience. With at least one manager investing $1 million or more in this offering, investors can have some assurance that the team's interests are aligned with theirs.

Below Average

People

Distillate Capital remains well-positioned in an increasingly competitive industry, earning it an Above Average Parent Pillar rating. Managers at Distillate Capital are at the top of the industry when it comes to eating their own cooking. Almost 67% of the firm’s assets are represented by a manager who invests at least $1 million in their respective product, in an effort to align portfolio manager and shareholder interests. The firm stands out in its commitment to investor values by offering an open-end and exchange-traded product lineup at a low cost. On average, the firm charges fees on its funds that are within the second cheapest quintile of its category. With an average asset-weighted tenure of six years among the longest-tenured managers at Distillate Capital, the firm is on par with peers. Seasoned teams tend to have more experience to draw upon should they need to weather turbulent market conditions.

Parent

Distillate U.S. Fundamental Stability & Value ETF

DSTL tracks an index of large-cap stocks that score favourably for financial indebtedness, fundamental stability, and valuation. The portfolio is equally weighted, modified by free cash flow.

DSTL actively selects large-cap stocks that score favourably for financial indebtedness, fundamental stability, and valuation.

DSTL is an actively-managed U.S. value ETF. It focuses on large-cap blue-chips, think Johnson & Johnson or AbbVie. The fund is cheaper than the S&P 500, and has outperformed since inception too, unlike most of its value peers.

DSTL: Actively-Managed U.S. Value ETF, Cheap Valuation, Strong Performance Track-Record

The Distillate U.S. Fundamental Stability & Value ETF aims to provide investors with exposure to undervalued stocks with stable cash flows. The ETF uses a proprietary algorithm to select stocks based on fundamental stability and value factors. Though it has outperformed the market since its inception in 2018, interested investors should consider the long-term implications.

DSTL: Distillation At A Price

DSTL, an actively managed vehicle focused on top-quality U.S. stocks with copious free cash flows, has reconstituted its portfolio since my December note. DSTL has become more attractive from a valuation standpoint, with quality definitely remaining robust. Unfortunately, there is something to dislike about growth. I am of the opinion that there are ample reasons for a Buy rating.

DSTL: With A Solid Share Of Holdings Replaced, This FCF Strategy Remains A Buy

DSTL is an actively managed FCF-focused ETF, prioritizing fundamental stability and value. DSTL has an exceedingly convincing performance track record, as it beat IVV in 33 out of 61 of its full trading months since its launch in October 2018. There is a solid factor mix under the hood, with a plethora of adequately valued, cash-rich names with low leverage and impressive capital efficiency.

DSTL: An Alpha-Generating ETF Positioned To Gain Significantly

Distillate U.S. Fundamental Stability & Value ETF picks stocks based on criteria including cash flow yield, cash flow stability, and debt. The DSTL ETF's top sectors are healthcare, technology and industrials. It is not only a value ETF, but also a quality ETF.

DSTL: A Cash Flow-Focused ETF

Distillate Fundamental Stability & Value ETF selects and weights stocks based on cash flow, stability and debt. About one-third of asset value is in technology.

DSTL Efficiently Combines Value And Quality Styles

Vanguard Value ETF

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Distillate Small/Mid Cash Flow ETF

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These ETFs Help You Invest Like An Owner, Not A Speculator

DSTL is a fundamentals-based ETF using proprietary screens for quality and value. Since 2018, the fund has nearly $1 billion in assets under management and has a 0.39% expense ratio. Its short track record is impressive, outperforming SPY by 3.33% per year. DSTL even outperformed in 2020 when growth stocks took off.

DSTL: A Fundamentals-Focused ETF With An Excellent Track Record

Pacer US Cash Cows 100 ETF

Free cash flow yielding quality companies outperform indebted companies over the long term. Since their inception, two ETFs that screen for free cash flow, COWZ and DSTL, have outperformed SPY.

Free Cash Flow ETFs COWZ And DSTL: Core Long-Term Funds

DSTL is a value and quality-centered ETF with an impressive track record. It had beat IVV every year since its inception in 2018; its 2022 loss has been less steep. DSTL portfolio has been rebalanced a few times since my January note, and an update is overdue.

DSTL: A Second Look At The Outperformer And Its Risks

DSTL implements a strategy mixing value and quality styles, mostly in large cap stocks. 59% of asset value is in 3 sectors: healthcare, technology and industrials.

DSTL: A Promising Mix Of Value And Quality

Established in October 2018, DSTL tracks the proprietary Distillate U.S. Fundamental Stability & Value Index, a benchmark that is supposed to encompass cash-rich, high-quality U.S. bellwethers capable of delivering robust returns.

DSTL: Brilliant Cash Flow Strategy, Though Valuation Risks Do Exist

Roundhill Deep Value

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FlexShares International Quality Dividend Defensive Index ETF

iShares Russell Mid-Cap Value ETF

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SPDR S&P 600 Small Cap Value ETF

Invesco S&P 500 Enhanced Value ETF

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A breakdown of DSTL's strategy and performance.

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First Trust Dow 30 Equal Weight ETF

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Distillate Capital rolls out a second fund, while other funds undergo reorganizations and index changes.

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Value stocks might finally have their day – and that means great things for a host of long-maligned value exchange-traded funds (ETFs). Growth has been running up the score against value for more than a decade.

News for Distillate U.S. Fundamental Stability & Value ETF ETF (DSTL)