Astoria US Quality Kings ETF

ROE

Market cap $175M

The portfolio generated a modestly positive absolute return in Q3, but it trailed the MSCI All Country World Small Mid Index. The Q3 underperformance was driven by stock selection in the IT, financials and consumer discretionary sectors. On the positive side, stock selection in the health care and industrials sectors was the strongest contributor to performance.

Builder confidence stayed flat in September, but falling mortgage rates may spark a housing market rebound, with stocks like DHI, TOL, HD, LOW and MAS already gaining ground.

On Thursday, Astoria Portfolio Advisors expanded its ETF selection with the launch of the Astoria Dynamic Core US Fixed Income ETF (AGGA).  AGGA is an actively managed fund that looks to generate current income to its investors.

The Astoria US Equal Weight Quality Kings ETF focuses on high-quality mid and large U.S. companies using a proprietary quantitative methodology and equal-weight allocation. ROE's valuation is relatively low with a P/E ratio of 17.4x, driven by its mid-cap focus and underweight exposure to high-valuation mega caps. Despite higher EBITDA margins and Return on Equity compared to an equal-weighted Russell 1000 portfolio, ROE's profitability lags behind the market cap-weighted Russell 1000 index.

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The Astoria Portfolio Advisors CEO warns the S&P 500 is weighted too heavily toward Big Tech.

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Actively managed ROE offers exposure to around 100 top-quality U.S.-listed stocks, which are weighted equally. The factor mix I found under the hood is nothing short of robust, with quality exposure being fairly large. Strong value characteristics are also to mention. Alas, ROE is well behind IVV when it comes to the growth factor, which is in part responsible for its underperformance.

Earnings season is in full swing, and five of the “Magnificent 7” are reporting quarterly results this week. Wall Street has been steadily raising the alarm on mega-cap concentration risks, and recent notes out from Goldman Sachs and Vanguard have cranked up the hazard level a notch.

Long-time ETF industry veteran and CEO and CIO of Astoria Advisors, John Davi, launched his firm's third ETF at the start of October. The Astoria US Quality Growth Kings ETF (GQQQ) joined the $145 million Astoria US Equal Weight Quality Kings ETF (ROE) and the $65 million AXS Astoria Inflation Sensitive ETF (PPI).