How does the EQTY ETF work?

Exchange-Traded Funds (ETFs) have gained immense popularity in recent years as an investment option in the world of finance. They offer diversification, liquidity, and ease of trading, making them a favored choice for both novice and experienced investors. In this article, we will delve into the details of the EQTY ETF, examining its overview, underlying assets, benefits for investors, and considerations before investing.

EQTY ETF: Overview

Before you invest in any ETF, it's crucial to understand its basic structure and purpose. The EQTY ETF, also known as the Kovitz Core Equity ETF, is designed to primarily invest in equity securities of both U.S. and foreign companies. The Kovitz Investment Group Partners, LLC, the entity behind this ETF, aims to select high-quality equity securities believed to be undervalued by using a combination of qualitative and quantitative analysis.
Equity securities within the EQTY ETF can include common stocks, common stock equivalents (such as rights or warrants), and convertible securities. The fund also has the flexibility to invest in foreign companies directly or through depositary receipts issued by U.S. banks.
The starting universe for the Adviser of this ETF includes the constituents of the S&P 500 Index, non-U.S.-based companies in the S&P Global 100 Index, and companies in the top quartile in terms of market capitalization (generally, $5 billion and up) of the S&P Midcap 400 Index.
The investment philosophy driving the EQTY ETF is grounded in the principles of Benjamin Graham, Warren Buffett, and Charlie Munger, emphasizing the concept of a "Margin of Safety." This approach prioritizes the safety of principal and focuses on minimizing permanent loss of capital, aligning with the ETF's objective of investing in undervalued companies.

EQTY ETF: Underlying and Exposure

To fully understand the EQTY ETF, it's essential to grasp what it tracks and how it achieves its investment goals. As mentioned earlier, this ETF primarily targets equity securities, seeking high-quality companies with growth potential.
The ETF's investments are not limited to specific market capitalizations, allowing it to consider small- and mid-cap companies. The selection process involves qualitative screening to identify market leaders with stable products, low capital requirements, and competent management.
After the initial qualitative screen, quantitative analysis further narrows down the universe of eligible companies. The ETF prioritizes companies with high returns on capital, a strong correlation between earnings and cash flow, low financial risk, and valuations based on discounted cash flow models.
By following this approach, the EQTY ETF aims to build a concentrated portfolio consisting of 30 to 40 companies where the best investment ideas can have a meaningful impact on performance. This focus on in-depth research and price consciousness helps mitigate investment risk.

EQTY overlap How does work the EQTY ETF?

EQTY ETF: Benefits to Invest In

Investors considering the EQTY ETF may wonder about the advantages it offers. This ETF is designed to provide several benefits:
Diversification: The EQTY ETF allows investors to access a diversified portfolio of equity securities, reducing the risk associated with individual stock investments.</li>
Professional Management: The Kovitz Investment Group Partners, LLC, applies a rigorous investment strategy rooted in the principles of renowned investors like Benjamin Graham and Warren Buffett.
Focus on Value: By seeking undervalued companies, the ETF aims to provide investors with the potential for long-term capital appreciation.
Concentration: With a concentrated portfolio of carefully selected stocks, the EQTY ETF focuses on its best investment ideas

EQTY ETF: Considerations Before Investing

While the EQTY ETF offers several advantages, potential investors should also be aware of important considerations:
Risk Tolerance: As with any investment, it's crucial to assess your risk tolerance and determine whether the ETF aligns with your investment goals.
Long-Term Perspective: The ETF's investment philosophy emphasizes long-term value. Investors should be prepared for a buy-and-hold approach rather than short-term trading.</li>
Research: Before investing, conduct thorough research on the ETF's holdings, investment strategy, and historical performance.

Conclusion

The EQTY ETF, also known as the Kovitz Core Equity ETF, offers investors the opportunity to access a diversified portfolio of equity securities with a focus on undervalued companies. By adhering to the principles of value investing, this ETF aims to provide long-term capital appreciation while prioritizing the safety of principal. Before investing, assess your risk tolerance and conduct due diligence to determine if the EQTY ETF aligns with your investment objectives.
Disclaimer: This article does not provide investment advisory services.

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