ABEQ hunts for deeply undervalued stocks using a proprietary multi-factor value model that goes beyond simple P/E ratios. The fund targets companies trading at significant discounts to intrinsic value while maintaining quality filters to avoid value traps.
How It Works
The fund employs a systematic approach combining traditional value metrics (price-to-book, price-to-earnings, EV/EBITDA) with quality screens for profitability and balance sheet strength. Holdings are equal-weighted and rebalanced quarterly, giving smaller positions the same impact as larger ones. This construction amplifies the value tilt by preventing mega-caps from dominating returns.
Key Features
- Equal-weighting amplifies small/mid-cap value exposure vs market-cap weighted alternatives
- Zero expense ratio makes it the cheapest active value strategy available
- Quality overlay screens out distressed companies that screen cheap for good reasons
Risks
- Value strategies can underperform growth for years — has happened for most of the 2010s
- Equal-weighting increases volatility by 20-30% vs cap-weighted funds during selloffs
- Limited track record since 2020 means the strategy is untested across full market cycles
Who Should Own This
Best suited for patient investors who believe mean reversion will eventually reward cheap stocks and can stomach extended periods of underperformance. Works as a 10-20% satellite position to complement growth-heavy core holdings, particularly for those worried about tech valuations but unwilling to completely abandon equities.