Looking for broad exposure to the Large Cap Growth segment of the US equity market? You should consider the Motley Fool 100 Index ETF (
TMFC Quick Quote TMFC - Free Report) , 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 $592.97 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
Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
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. Even though growth stocks are more likely to outperform their value counterparts in strong bull markets, value stocks have a record of delivering better returns in almost all markets than growth stocks.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
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 0.19%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, 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 43.10% of the portfolio. Telecom and Consumer Discretionary round out the top three.
Looking at individual holdings, Apple Inc (
AAPL Quick Quote AAPL - Free Report) accounts for about 13.76% of total assets, followed by Microsoft Corp ( MSFT Quick Quote MSFT - Free Report) and Alphabet Inc ( GOOG Quick Quote GOOG - Free Report) .
The top 10 holdings account for about 60.5% 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 an index of US stocks, recommended by The Motley Fool, LLC (TMF) analysts, either in the Motley Fool IQ analyst opinion database or TMF research publications. From this recommendation pool, the index chooses the 100 largest US companies by market cap and weights them according to market capitalization. The index undergoes quarterly reconstitution.
The ETF has gained about 40.28% so far this year and is up about 31.32% in the last one year (as of 11/17/2023). In the past 52-week period, it has traded between $29.82 and $42.66.
The ETF has a beta of 1.07 and standard deviation of 21.82% for the trailing three-year period. With about 102 holdings, it effectively diversifies company-specific risk.
Motley Fool 100 Index ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, TMFC is an outstanding option for investors seeking exposure to the Style Box - Large Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard Growth ETF (
VUG Quick Quote VUG - Free Report) and the Invesco QQQ ( QQQ Quick Quote QQQ - Free Report) track a similar index. While Vanguard Growth ETF has $97.81 billion in assets, Invesco QQQ has $212.04 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%. Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
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.