ETC 6 Meridian Mega Cap Equity ETF

SIXA

Market cap $426M

The ETC 6 Meridian Mega Cap Equity ETF offers a defensive, value-tilted portfolio focused on high-quality, large-cap U.S. companies. SIXA trades at a significant discount to the Russell 1000 and peers, with a 15.2x P/E and strong low-volatility characteristics. While SIXA lags the Russell 1000 in bull markets, it outperforms value peers and shows resilience during downturns, with the lowest volatility among competitors.

SIXA is a high-conviction actively managed fund meant to complement broad-market ETFs like those tracking the S&P 500 Index. Its expense ratio is 0.47%. After screening out "mega-cap" stocks with low-quality and low momentum features, managers rank and select stocks based on beta, momentum, yield, value, and quality. My fundamental analysis shows the balance you would expect from a multi-factor ETF. SIXA's 16.23x forward P/E represents a 32% discount over SPY, and its growth features aren't bad, either.

The sheer number of ETFs, especially within the same style, complicates investor choices due to vastly different portfolios and risk profiles. Manually analyzing each ETF is impractical; investors risk insufficient analysis and missed opportunities due to the extensive number of holdings. EA Series Euclidean Fundamental Value ETF ranks as the top overall style ETF, while iShares Morningstar Mid-Cap Growth ranks last among the best.

Following on last week's top 10 list, this week's blog focuses on ETFs related to the stocks in the list. For this week, we then screened for ETFs that contained each stock that were also rated 5 (Strong Buy), focusing on the ETF that held the stock in the greatest percentage, then traveling down the lists of ETFs that held it until we found one rated 5. This resulted in a list of Strong Buy 5 rated ETFs that held at least one Strong Buy 5 rated stock as a major holding.

ETC 6 Meridian Mega Cap Equity ETF focuses on the top 10% of U.S. stocks by market size, using a quant-based approach to outperform its benchmark index. The SIXA ETF's sector allocation leans towards technology, but balances growth and value with hefty consumer staples and financial sectors. SIXA's strategy may offer better risk-adjusted returns but comes with a high expense ratio and limited exposure to smaller firms.

ETFs like SIXA are designed to outperform efficient markets, but the market hasn't been efficient at all since the pandemic struck. My thesis is a three-part story that discusses the skew created (primarily) by Big Tech and the Magnificent 7. This skew has prevented ETFs with sound strategies from realizing their full potential, and it's not restricted to just SIXA.