A Cheap AND Actively Managed Concentrated ETF?

Now we shift to our mystery battle category where our judges can give us a single factor or multiple factors that are they feel are crucial to today's contest.

Tony, what is your mystery battle category and which of these ETFs wins it?

I'm going to go back to fees again.

Uh it's one of like the most basic ones here, but like none of these are priced very attractively for me.

Uh the one that I'm going to go to is a wild card.

It's from Principal Asset Management called USMC.

It's their mechap ETF.

It's only got 25 stocks and the active share isn't that much better at 50% but it only cost 12 basis points.

Uh so you you're getting a concentrated portfolio make no mistake of 25 meggaap companies for 12 bips.

That's eight lower than tot.

Uh it's not entirely I would say it's kind of like a quasi active.

So what they do is they take the top 50% of the S&P 500 by market cap and they screen that into the portfolio. from that top 50% the five largest stocks or the top 10% are held at market cap weight.

So that comprises the most of your beta exposure and then the remaining stocks in the top half that were screened in are ranked and weighed on principles proprietary financial strength score and that's where the black block comes in.

They don't really tell you what goes into that but this entire process here is laid out for you very clearly in a chart that shows you all the different steps by which stocks are screened in and out which I appreciate.

And uh did I mention it's only 12 pips and it's outperformed the S&P 500?

So if I was to go concentrated, assuming that I just don't go out there and assemble my own basket for whatever reason, I'd be willing to pay this, but not, you know, 20 for TPT and certainly not 50 and 55 for the other two.

So that's my mystery battle category.

And going back to cost and I'd like to introduce USMC as my winner.

That's some big league analysis and a reminder of how important cost is.

Well done.