USMD targets US technology companies trading at discounts to their peers, betting that traditional value metrics can identify overlooked opportunities in a sector known for growth-at-any-price investing. The fund aims to capture tech upside while avoiding the nosebleed valuations that plague much of the sector.
How It Works
The fund screens US-listed technology stocks for classic value characteristics like low price-to-earnings, price-to-book, and price-to-sales ratios relative to sector medians. Holdings are weighted by a combination of value score and market cap, with quarterly rebalancing to capture new opportunities as valuations shift. This systematic approach avoids the momentum-chasing that drives most tech investing, instead buying when others are selling.
Key Features
- Applies disciplined value screening to find tech stocks trading below 15x earnings when sector averages exceed 25x
- Zero expense ratio makes this the cheapest way to access value-oriented tech exposure
- Quarterly rebalancing captures mean reversion as yesterday's highfliers become tomorrow's value plays
Risks
- Value traps abound in tech — cheap stocks often deserve their discounts due to disruption or obsolescence
- Could underperform growth-focused tech funds by 20-30% during momentum-driven rallies
- Brand new fund with no track record and zero assets raises questions about viability and liquidity
Who Should Own This
Built for contrarian investors who believe the tech sector's obsession with growth creates systematic mispricings in profitable but boring companies. Works best as a 10-20% satellite position within tech allocation for those uncomfortable with paying 40x sales for the latest AI darling. Patient investors willing to wait for value recognition should consider this over momentum-chasing alternatives.