Our Very Attractive Stocks Index, aka the Bloomberg New Constructs Ratings VA-1 Index (you can look it up under this ticker: BNCVA1T:IND), has outperformed the S&P 500 by 68% over the last 5 years. In the first half of 2025, it also outperformed rising 7.3% compared to the S&P 500 rising 6.8%.
This outperformance highlights how our superior Stock Ratings produce novel alpha. We use those same Stock Ratings to determine our ETF and mutual fund ratings. After all, a fund is only as good as the stocks it holds.
We think it’s only logical to evaluate a fund based on research and ratings of each of its holdings. This bottoms-up approach is more forward-looking than alternative fund ratings, like Morningstar. Given the outperformance of the Very Attractive Stocks Index and our stock picking awards, we think our bottoms-up fund research merits your attention. We provide ratings on 7,600+ ETFs and mutual funds.
After reviewing them all, we found a mutual fund that gets our Very Attractive Rating because it holds stocks with strong fundamentals and cheap valuations while charging below-average fees.
Below is a summary of our review of the fund in our recent Long Idea report, available to Pro and Institutional members. You can buy the full report a la carte here. We hope you enjoy this unique mutual fund research. No other firm comes close to matching our diligence. Feel free to share with friends and colleagues. And, let us know what you think.
You need a Professional Membership or higher to view all the content on this page.
Already a member?
Learn more about our research here.
Forward-Looking Research Reveals a Very Attractive Fund
This fund earns our Very Attractive Predictive Fund Rating, while Morningstar gives it just a 2-Star (backward-looking) rating. Our analysis of holdings reveals the fund allocates more to good stocks, i.e. profitable companies with undervalued stock prices, than its benchmark. See Figure 2 in the full report.
We leverage our Robo-Analyst technology to assess a mutual fund’s portfolio quality by analyzing the fund’s individual stock holdings.
Through this rigorous analysis, we find that this fund allocates 31% of its assets to Attractive-or-better rated stocks compared to just 15% for the benchmark. On the flip side, the fund allocates just 19% of its assets to Unattractive-or-worse rated stocks compared to 35% for the benchmark.
Per Figure 3 in the full report, our holdings analysis also reveals the fund’s portfolio is of much higher quality than the S&P 500 as represented by State Street SPDR S&P 500 ETF Trust (SPY). SPY earns our Attractive rating, but only 10% of SPY’s portfolio is allocated to stocks rated Attractive-or-better and 33% is allocated to stocks rated Unattractive-or-worse.
Quality Stocks Drive Very Attractive Risk/Reward Rating
Figure 4 in the full report contains our detailed rating for the mutual fund, which includes each of the criteria we use to rate all mutual funds under coverage. These criteria are the same for our Stock Rating Methodology, because the performance of a mutual fund’s holdings is responsible for the performance of the mutual fund after fees. Figure 4 in the full report also compares the mutual funds rating with those of its benchmark and SPY.
The mutual fund’s holdings are superior or equal to the benchmark and SPY in four out five of the criteria that make up our Portfolio Management rating. Specifically:
- The fund’s holdings generate positive economic earnings, same as the benchmark and SPY.
- The fund’s free cash flow (FCF) yield of 4% is higher than the benchmark and SPY’s at 2%.
- The price-to-economic book value (PEBV) ratio for the fund’s holdings is 1.6, which is much lower than the benchmark at 2.7 and SPY’s at 3.5.
- Our discounted cash flow analysis reveals an average market implied growth appreciation period (GAP) of just 29 years for the fund’s holdings compared to 54 years for the benchmark and 71 years for SPY.
The takeaway?
This fund allocates to profitable businesses, as measured by the 11% ROIC of its holdings, which trade at prices that are much cheaper than the stocks held in the benchmark.
Strong profitability + cheap valuation = quality risk/reward.
….there’s much more in the full report. You can buy the report a la carte here.
Or, become a Professional or Institutional member – they get all Long Idea reports.
I’ll keep sending information on quality sectors, industries, or specific companies until you’re ready to start your membership, but know that we expect this pick to outperform.
Interested in starting your membership to get access to all our Long Ideas? Get more details here.