XDEVF: Invest In This ETF, But Not This Listing

seekingalpha07-30

EpiximagesThe XTRACKERS IE WD VL ETF 1C (OTCPK:XDEVF), which tracks the MSCI World Enhanced Value (USD) Index (TRN), is a European fund that’s not widely known in the U.S. ETF space. As ETFs go, it’s ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2455252660?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1371081879/image_1371081879.jpg","is_english":true,"pubTime":"2024-07-30 00:00","share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","id":"2455252660","market":"us","top_or_hot":-1,"title":"XDEVF: Invest In This ETF, But Not This Listing","media":"seekingalpha","content":"<div>\n<p>EpiximagesThe XTRACKERS IE WD VL ETF 1C (OTCPK:XDEVF), which tracks the MSCI World Enhanced Value (USD) Index (TRN), is a European fund that’s not widely known in the U.S. ETF space. As ETFs go, it’s ...</p>\n\n<a href=\"https://seekingalpha.com/article/4707582-xdevf-invest-in-this-etf-but-not-this-listing\">Source Link</a>\n\n</div>\n","source":"seekingalpha_fund","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>XDEVF: Invest In This ETF, But Not This Listing</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nXDEVF: Invest In This ETF, But Not This Listing\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-07-30 00:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4707582-xdevf-invest-in-this-etf-but-not-this-listing><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>EpiximagesThe XTRACKERS IE WD VL ETF 1C (OTCPK:XDEVF), which tracks the MSCI World Enhanced Value (USD) Index (TRN), is a European fund that’s not widely known in the U.S. ETF space. As ETFs go, it’s ...</p>\n\n<a href=\"https://seekingalpha.com/article/4707582-xdevf-invest-in-this-etf-but-not-this-listing\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU1244550494.USD","symbol_name":"FRANKLIN GLOBAL MULTI-ASSET INCOME \"A\" (USDHEDGED) ACC","start_time":0,"source_url":"https://seekingalpha.com/article/4707582-xdevf-invest-in-this-etf-but-not-this-listing","article_id":"2455252660","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1371081879/image_1371081879.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2455252660","pubTimestamp":1722268800,"sourceInfo":{"source_id":"seekingalpha_fund","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"If you look at the fund’s top holdings, it’s clear that a lot of leverage is coming from just a few of these large-caps. Many of the larger holdings are actually dragging down the fund’s performance, which is why I don’t like the passive nature of this fund. In a dynamic market environment we’re currently in, a more frequent rebalancing can make all the difference in overall performance. However, since its strategy is rules-based, we’re not likely to see any of the Magnificent 7 feature in its holdings any time soon. One example is Cisco Systems , the fund’s top holding, accounting for +3% of the $1.74 billion AUM. CSCO has returned a reasonable 91% over the past decade, but over the past five years it’s been mostly trading sideways - in general, with a lot of volatility, but losing nearly 15% since 2019. Its second-largest holding, Intel Corp  has performed even more poorly over both time frames, down over 7% in the past decade and nearly 40% in the last five years. Qualcomm (Q","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU1244550494.USD":"FRANKLIN GLOBAL MULTI-ASSET INCOME \"A\" (USDHEDGED) ACC","FDN":"First Trust Dow Jones Internet I","TRN.AU":"Torrens Mining","BK4549":"软银资本持仓","LU0061474705.USD":"THREADNEEDLE (LUX) GLOBAL DYNAMIC REAL RETURN \"AU\" (USD) ACC","USD":"ProShares Ultra Semiconductors","LU1974910355.USD":"Allianz Thematica Cl AMg DIS USD","USD.AU":"BETASHARES US DOLLAR ETF","BK4548":"巴美列捷福持仓","IE0034235295.USD":"PINEBRIDGE GLOBAL DYNAMIC ASSET ALLOCATION \"A\" (USD) ACC","LU0170899867.USD":"EASTSPRING INVESTMENTS WORLD VALUE EQUITY  \"A\" (USD) ACC","IE00BJJMRX11.SGD":"Janus Henderson Balanced A Acc SGD","INTC":"英特尔","AVNV":"Avantis All International Markets Value ETF","IE00BJTD4V19.USD":"NEUBERGER BERMAN US LONG SHORT EQUITY \"A1\" (USD) ACC","IE00BDCRKT87.USD":"PINEBRIDGE GLOBAL DYNAMIC ASSET ALLOCATION \"ADC\" (USD) INC","IBM":"IBM","LU0079474960.USD":"联博美国增长基金A","BK4554":"元宇宙及AR概念","LU0048584097.USD":"FIDELITY FUNDS  GLOBAL THEMATIC OPPORTUNITIES \"A\" (USD) INC","IE0034235188.USD":"PINEBRIDGE GLOBAL FOCUS EQUITY \"A\" (USD) ACC","IE00BJJMRY28.SGD":"Janus Henderson Balanced A Inc SGD","IE00BMPRXN33.USD":"NEUBERGER BERMAN 5G CONNECTIVITY \"A\" (USD) ACC","TRN":"Trinity Industries Inc","GBX":"格林布赖尔","IE00B775H168.HKD":"JANUS HENDERSON BALANCED \"A5M\" (HKD) INC","IE00BFSS8Q28.SGD":"Janus Henderson Balanced A Inc SGD-H","DFIV":"Dimensional International Value ETF","CSCO":"思科","IE0004445015.USD":"JANUS HENDERSON BALANCED \"A2\" (USD) ACC","EUR.AU":"EUROPEAN LITHIUM LTD","BK4149":"建筑机械与重型卡车","LU0109391861.USD":"富兰克林美国机遇基金A Acc","AVIV":"AVANTIS INTERNATIONAL LARGE CAP VALUE ETF","LU1430594728.SGD":"Eastspring Investments - Global Low Volatility Equity AS SGD","BK4559":"巴菲特持仓","LU1066053197.SGD":"HSBC GIF GLOBAL EQUITY VOLATILITY FOCUSED \"AM3\" (SGDHDG) INC","BK4020":"通信设备","IE00B19Z8W00.USD":"FTGF CLEARBRIDGE US LARGE CAP GROWTH \"A\" INC","IE00B3M56506.USD":"NEUBERGER BERMAN EMERGING MARKETS EQUITY \"A\" (USD) ACC","BK4550":"红杉资本持仓","BK4141":"半导体产品","IE00BD6J9T35.USD":"NEUBERGER BERMAN NEXT GENERATION MOBILITY \"A\" (USD) ACC","QCOM":"高通","BK4122":"互联网与直销零售","BK4551":"寇图资本持仓","IE00BKVL7J92.USD":"Legg Mason ClearBridge - US Equity Sustainability Leaders A Acc USD"},"translate_title":"XDEVF：投资此ETF，但不投资此上市","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AVNV":1,"USD.AU":1,"USD":1,"TRN.AU":1,"TRN":1,"GBX":1,"FDN":1,"EUR.AU":1,"DFIV":1,"CSCO":1,"AVIV":1,"INTC":0.8,"QCOM":0.7,"IBM":0.7},"content_text":"EpiximagesThe XTRACKERS IE WD VL ETF 1C (OTCPK:XDEVF), which tracks the MSCI World Enhanced Value (USD) Index (TRN), is a European fund that’s not widely known in the U.S. ETF space. As ETFs go, it’s a fairly cheap one with an expense ratio, or what the company calls “all-in fee”, of 0.25% per annum, but it does come with very low liquidity if you’re trading the U.S. OTC symbol. The ETF itself is quite large, with an AUM of $1.74 billion, as at the end of June 2024. XDEVF is essentially a passive fund that’s only rebalanced twice a year, so you’re not likely to see much movement in the top ten holdings, which primarily comprise large-cap and mid-cap entities in technology, communications, consumer discretionary, health care, oil & gas, and a few other sectors. As such, it’s basically a broad-market International ETF utilizing a value strategy that weights its portfolio based on key metrics such as EV to cash flow, price to earnings, and price to book. Surprisingly, and although you might not be able to tell from the U.S. ticker’s performance due to the low liquidity and that fact was only listed this year, the UK and Swiss listings have better liquidity and indicate that its performance has been quite strong over the years since its inception in 2014. You’ll need to keep in mind that it used to track a different underlying index at the time, but in 2016, the benchmark index changed. As I mentioned, the fund has been doing reasonably well, with a 125% return since then, which works out to a CAGR of roughly 8.2%. That’s based on its price return on the London Stock Exchange. It listed in the U.S. in January of this year, and on 6M basis, the ETF has returned 3.4% for the XDEVF U.S. ticker.   SAFor reference, here are the other listed tickers: Borsa Italiana - Bloomberg Ticker: XDEV (EUR) London Stock Exchange - Bloomberg Ticker: XDEV LN (GBX) SIX - Swiss Exchange - Bloomberg Ticker: XDEV SW (USD) XETRA - Bloomberg Ticker: XDEV GY (EUR) What’s Driving Up Its NAV? If you look at the fund’s top holdings, it’s clear that a lot of leverage is coming from just a few of these large-caps. Many of the larger holdings are actually dragging down the fund’s performance, which is why I don’t like the passive nature of this fund. In a dynamic market environment we’re currently in, a more frequent rebalancing can make all the difference in overall performance. However, since its strategy is rules-based, we’re not likely to see any of the Magnificent 7 feature in its holdings any time soon. One example is Cisco Systems (CSCO), the fund’s top holding, accounting for +3% of the $1.74 billion AUM. CSCO has returned a reasonable 91% over the past decade, but over the past five years it’s been mostly trading sideways - in general, with a lot of volatility, but losing nearly 15% since 2019. Its second-largest holding, Intel Corp (INTC) has performed even more poorly over both time frames, down over 7% in the past decade and nearly 40% in the last five years. Qualcomm (QCOM) fares much better in the long term, delivering a price return of nearly 140% in the last five years, 45% of that coming in the last year alone. That’s one of the fund’s upside boosters. IBM (IBM) is another portfolio booster, returning 35% in the last year. The share performances of these tech companies have been quite disparate, as you can see, and that’s the issue with a rules-based approach to value picks. In reality, though, it’s more of an opportunity than a problem. Valuation Vs. Value A rules-based system - or any quant system, for that matter - doesn’t usually consider investor sentiment as a core consideration. In an efficient market, that would make sense, but the market is far from efficient right now, and emotions tend to cloud the judgment of retail investors. However, there’s a problem when the market is completely ruled by investor sentiment. All you need to do is take a look at how the Magnificent 7 have literally taken over the market with their lofty valuations and massive market cap increases. SA The top three most highly valued companies are trading above 30x their TTM cash flows, and even the bottom four are between 15x and 30x. Meanwhile, the SP500’s average P/S ratio, which has rarely crossed 2x in the past twenty years, is now near the period high set in December 2023. Currently at 2.88x, the average of these 500 companies is being skewed heavily to the upside because of the valuations of a few mega-caps, many of which might be generating massive cash flows but are much less profitable on a GAAP basis than you’d expect with those kinds of cash flows.   Multipl That’s also why their price to TTM GAAP earnings are even more skewed to the upside. SA The reality, however, is that these are the prices that the market is willing to pay for these mega-stocks, so these valuations don’t even appear to matter as far as investors are concerned. And it’s been this way for nearly a year and a half, despite high interest rates having prevailed for even longer. These companies don’t need external capital to grow stronger - they essentially generate their own, thereby setting in motion a virtuous cycle that takes their valuations higher and higher even though most other companies are hesitant to raise cash because of the sheer cost of capital in the current high interest rate environment coupled with higher equity risk. In such a scenario, stocks like INTC and CSCO look like the legacy entities they are. Although their valuations are far more attractive, they’re not ‘valued’ by investors as much as the darling Mag 7 are. The challenge here is that value stocks will not be growing strong as long as growth stocks dominate, and frankly, I have no idea when that Mag 7 bubble is going to start deflating. Could it have already started? That’s definitely a possibility, and we’ve already seen several of them losing their momentum over the past couple of months. SA On the other hand, are they setting up for another bull run once earnings data is out for all of them? That’s also very likely, because the demand for AI is still at a very strong level. The problem is that these companies are spending heavily on AI investments, but only a few of them are seeing tangible returns on that R&D spend. Although there are exceptions like Nvidia Corp. (NVDA) and, to a much smaller degree, Amazon (AMZN) and Meta Platforms (META), overall ROTC hasn’t been on an aggressive uptick. SA The picture is a little different when you look at a more specific metric such as RORC or return on research capital, but even there, only a few companies that are reaping the massive benefits that AI promises.   MooMoo Of course, I’ll concede that these returns aren’t going to be immediate. It might take years before AI products start generating the kind of revenues expected by market researchers, and that’s also why I don’t believe this bubble is going to burst all at once. It might deflate a little as the market adjusts to the new reality of artificial intelligence, and valuations are bound to be susceptible to those adjustments. I don’t really see a sudden drop in valuations. Coming back to our valuation vs. value discussion, thankfully, this market dynamic presents an excellent long-term opportunity to buy ‘relative underperformers’ at very attractive valuations, and that’s essentially what XDEVF holds. That’s why the fund is able to deliver those kinds of returns outside the U.S. listing. As long as these companies show strong fundamentals, their value is going to keep growing, but their valuations might not keep up because the market isn’t looking in that direction right now. Should You Invest in XDEVF? Contrary to my bullish arguments for this ETF, I can’t really recommend a buy due to reasons such as non-existent liquidity and all the associated risks. What I should do - and will do - is to recommend the European tickers to U.S. investors who have access to foreign securities through their brokerages. If you’ve got access, these are the value picks you’d want. Even CSCO and INTC are not poor performers. They might have lost their edge for now, but they’re still multi-billion-dollar companies with ridiculously low valuations, so there’s no reason to stay away from this ETF just because they’re a drag on the fund’s performance right now. Good value is good value, so it’s okay to have that appear in a portfolio that’s doing well despite that drag. Again, I’m not talking about the U.S. listing for this ETF, just the European and UK ones. That’s where you’ll find the kind of liquidity you need to enter and exit sizable positions.   SAOther alternatives you could consider, which also have higher liquidity and volumes, include the Dimensional International Value ETF (DFIV), Avantis All International Markets Value ETF (AVNV), and Avantis International Large Cap Value ETF (AVIV), most of which have reasonable dividend yields in the range of 2% to 3% and have shown relatively strong performance across various time frames.  Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2455252660"}