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Capital Groups ETF's CGUS and CGDV

edited June 2023 in Fund Discussions
Also posted on Big-Bang.

As I mentioned in another thread, I am looking for a "compliment" to FXAIX (Taxable acct.) and PRILX (IRA), to take a little edge off of my portfolios growth tilt, in particular these two LCB funds lean growth these days.

Although CGDV (div. value) is classified by M* as LCV, it's short life has been as a LCB (equity income), whereas CGUS (core equity) is classified as a LCB (growth and income) but has a strong growth lean. There appears to be some overlap but from what I can tell, nothing too crazy. Correct me if I am wrong, please.

From what I have read about Capital Group and their venture into the ETF world, is that they do not adhere religiously to the M* categories and are free to go where the best ideas are (actively managed). I'm considering CGDV because I like that it leans Value although it resides in the M* LCB category. Will this be the case going forward; I certainly do not know. A fund like this seems to better fit my goal, but I am torn.

Any suggestions, recommendations, insights, or thoughts on these or similar funds will be greatly appreciated!

Thank you, Matt

Comments

  • OMFL might be worth a look but I'm not exactly sure what you're looking for specifically.

    From Invesco site:

    Product Details

    "The Invesco Russell 1000 Dynamic Multifactor ETF (Fund) is based on the Russell 1000 Invesco Dynamic Multifactor Index (Index). The Fund will invest at least 80% of its total assets in the securities that comprise the Index. The Index is constructed using a rules-based approach that re-weights large-cap securities of the Russell 1000 Index according to economic cycles and market conditions, reflected by expansion, slowdown, contraction or recovery. The securities are assigned a multi-factor score from one of five investment styles: value, momentum, quality, low volatility and size. The Fund and Index are reconstituted and rebalanced based on economic indicator signal changes, as frequently as monthly."

    More on OMFL
  • Mark thank you. I’m not exactly sure what I’m looking for either. I’m kind of feeling my way through this process and trying to learn more about investing (especially ETFs) and myself. Risk tolerance, comfort zone, needs, patience, etc.

    My thoughts were to find a counterbalance to my growth tilted portfolio. Even my “blend” funds are now more growthy than blendy.

    Right now most value funds are having a rough go. Especially dividend focused funds. Maybe this is temporary but maybe not. Hence my looking into other options.
  • edited June 2023
    M* has Categories and Styles.

    M* puts funds in Categories (on Quote pages) by taking into account the fund objectives and its own assessments. So, sometimes that may differ from what the firms may say, especially when they give wide latitudes to fund managers. It's good in a way that M* doesn't just puts down what the fund firm or portfolio managers may say.

    M* Styles (on Portfolio pages) are based on M* analyses of the actual portfolio holdings. M* has its own dynamic definitions of SC, MC, SC, rather than static mkt-cap-based definitions that many firms use. That may give another reason for fund firms to complain.

    This M* dual evaluation accounts for funds where the fund managers have wide latitudes.

    Anyway, looking at M* Styles, CGDV is LC-blend almost near the border between value and blend, and CGUS is LC-blend almost at the border between blend and growth.
  • Hi Matt
    If you’re interested in LCB take a look at MOAT. it has a long track record and has beaten the S&P in multiple time frames with strong risk adjusted returns… also a great owl. Ben has discussed it on the boards.
  • CGDV (and CGGO) have been on my watchlist since inception and will be seeing some $$$ from me sometime this year. I like CG's approach to investing (I hold several American Funds in very large quantities) and this will be a solid LCB fund to help me switch from OEFs to ETFs in some accounts. CGDV did well in its inaugural year, fwiw saying.
  • edited June 2023
    @mcmarasco, here is a handy little tool someone else here posted a few weeks ago. I find it very helpful to look at overlap, especially for funds from the same house.

    FWIW, I moved some money to CGDV and CGGO this year. Mostly by selling individual stocks which I never seem to get right. These 2 ETFs have about a 20% overlap with each other. The 2 funds you are comparing have quite a bit more overlap.

    https://www.etfrc.com/funds/overlap.php
  • @mcmarasco, check out PARWX if you are comfortable with Parnassus. Maybe you have access to its institutional equivalent.

    SPGP will bend you away from growth, and large caps, but it's still the 500 universe.
  • Thanks everyone who replied! Great points and thoughts about M*, risk-reward, holdings overlap and more!

    I appreciate the info and suggestions; I will also check out MOAT and the overlap tool that MikeM provided.

    Please continue to provide any additional comments and suggestions, I am more than willing to perform the necessary DD.
  • edited June 2023
    Some stocks that are really blend may be in both growth and value indexes/benchmarks with different weights. That is why the sum of stocks in R1000-growth and R1000-value far exceeds that in R1000 (about 1,000). So, some overlap in holdings is OK.
  • WABAC, thank you for the suggestion. In fact, I do have a foot-hold in the institutional share class (PFPWX). Something about that fund gives me pause. As I mentioned earlier I do own PRILX.

    Yogibearbull, point well made! I think it's also important to heed overlap but maybe as important to gage to what % each stock is of the portfolio.

    If both hold MA, but fund "A" is at 12%, and fund "B" is at 2%. I would not consider that a "problem". Does that make investing sense? What are your (and others) thoughts?
  • edited June 2023
    Regarding PARWX...

    Jerome Dodson managed PARWX from inception (04/29/2005) until he retired on 12/31/2020.
    Billy Hwan became a PARWX comanager on 05/01/2018 and the sole manager in 2021.
    Mr. Dodson took a contrarian approach which resulted in an elevated risk profile.
    Mr. Hwan takes a relative value approach and stated that he wanted to reduce the fund's beta vs. the S&P 500.
    Past PARWX performance may not be very indicative of future performance.
  • Thank you all for your comments, suggestions and insights!
  • Regarding PARWX...

    Jerome Dodson managed PARWX from inception (04/29/2005) until he retired on 12/31/2020.
    Billy Hwan became a PARWX comanager on 05/01/2018 and the sole manager in 2021.
    Mr. Dodson took a contrarian approach which resulted in an elevated risk profile.
    Mr. Hwan takes a relative value approach and stated that he wanted to reduce the fund's beta vs. the S&P 500.
    Past PARWX performance may not be very indicative of future performance.

    Turnover is also a lot lower under Hwan than it often was under Dodson. I held it for a while in the early 2010's and got rid of it due to the high turnover. I probably should have held my nose. Whatever replaced PARWX in my portfolio probably didn't do as well.

    IIRC they didn't even market it as a value fund until they started thinking about the transition. It was just Dodson's project.

    I think Hwan gets some credit for the three year alpha of 4.53. Eight of the top ten holdings were bought under his watch, as were most of the top 25.

    OTOH, they are no longer fully independent since their partnership with AMG. And their funds after PARWX and PRBLX are run of the mill.

    Buying actively managed funds requires a lot more leg work, that's for sure. Given the OP's comments, he could also look at funds like DODGX and VEIRX as alternatives in the active space that would take him in different directions from growth.

    For etf's I would add SCHD and RWL if they haven't been mentioned before.
  • Thank you again for your insights. Until recently I invested in actively managed funds but I am now mixing in passive and trying to use the KISS method with limited funds.

    All suggestions are welcomed and I do look into all of them!

    There is a lot of experience and expertise on this board and I appreciate everyone sharing them.
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