Designed to provide broad exposure to the Large Cap Growth segment of the US equity market, the Motley Fool 100 Index ETF (TMFC) is a passively managed exchange traded fund launched on 01/30/2018.
The fund is sponsored by Motley Fool Asset Management. It has amassed assets over $396.30 million, making it one of the average sized ETFs attempting to match the Large Cap Growth segment of the US equity market.
Why Large Cap Growth
Large cap companies usually have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. When you consider growth versus value, growth stocks are usually the clear winner in strong bull markets but tend to fall flat in nearly all other environments.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF’s expense ratio.
Annual operating expenses for this ETF are 0.50%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.32%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund’s holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Information Technology sector–about 46.70% of the portfolio. Telecom and Healthcare round out the top three.
Looking at individual holdings, Apple Inc (AAPL) accounts for about 13.87% of total assets, followed by Microsoft Corp (MSFT) and Alphabet Inc (GOOG).
The top 10 holdings account for about 60.91% of total assets under management.
Performance and Risk
TMFC seeks to match the performance of the MOTLEY FOOL 100 INDEX before fees and expenses. The Motley Fool 100 Index is a proprietary, rules-based index designed to track the performance of the 100 largest, most liquid U.S. companies.
The ETF has lost about -28.18% so far this year and is down about -17% in the last one year (as of 06/22/2022). In the past 52-week period, it has traded between $30.80 and $44.66.
The ETF has a beta of 1.07 and standard deviation of 26.12% for the trailing three-year period. With about 101 holdings, it effectively diversifies company-specific risk.
Motley Fool 100 Index ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, TMFC is a reasonable option for those seeking exposure to the Style Box – Large Cap Growth area of the market. Investors might also want to consider some other ETF options in the space.
The Vanguard Growth ETF (VUG) and the Invesco QQQ (QQQ) track a similar index. While Vanguard Growth ETF has $66.44 billion in assets, Invesco QQQ has $153.55 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.