AAUS applies Alpha Architect's systematic value and momentum screens to find US stocks with both cheap valuations and improving price trends. The fund targets companies showing fundamental strength that the market hasn't fully recognized yet.
How It Works
The ETF runs a concentrated portfolio of 50-100 stocks selected through quantitative screens for value metrics like EV/EBITDA and momentum signals like 6-12 month price performance. Holdings are equally weighted and rebalanced quarterly, avoiding the mega-cap concentration of market-cap weighted funds. The systematic approach removes emotion from stock selection while capturing both value and momentum factors that have historically driven returns.
Key Features
- Combines value and momentum factors that typically work at different times, providing more consistent returns
- Equal weighting gives smaller positions the same impact as larger ones, increasing exposure to mid-caps
- Quarterly rebalancing forces profit-taking on winners and adds to laggards systematically
Risks
- Concentrated portfolio of 50-100 stocks means individual blowups hit harder than in broad market funds
- Value-momentum combination can underperform for years when growth stocks dominate, as seen 2017-2021
- Equal weighting underperforms in mega-cap rallies when the largest stocks drive market returns
Who Should Own This
Best for investors who believe in factor investing but want to avoid timing when to switch between value and momentum strategies. Works as a core equity replacement for those comfortable with tracking error versus the S&P 500, or as a 10-20% satellite position to add systematic factor exposure to a passive portfolio.