New York, NY – The Distillate U.S. Fundamental Stability & Value ETF (NYSEARCA:DSTL) is an actively managed U.S. equity ETF that targets inexpensive, high-quality stocks with stable cash flows. Despite challenging market conditions, DSTL has consistently outperformed both the S&P 500 and other U.S. value equity indexes since its inception, making it an attractive investment option. With a dividend yield of 1.3%, the fund may not be the best choice for income-seeking investors.

Adding to its appeal, DSTL’s investment strategy involves selecting 100 U.S. equities based on value, quality, and risk metrics. Although the specifics of the selection process are proprietary, the fund takes into consideration factors such as free cash flow stability, yields, and levels of indebtedness. By focusing on stable cash flows and avoiding heavily indebted companies, DSTL aims to deliver strong performance for its investors.

DSTL’s sector allocations indicate an overweight position in traditional industries like industrials and consumer goods, while being underweight in the tech sector due to valuation concerns. These sector tilts have a direct impact on the fund’s performance relative to the S&P 500, with DSTL likely to outperform when tech stocks underperform, and vice versa.

Furthermore, DSTL’s emphasis on large blue-chip companies like Johnson & Johnson, AbbVie, and Visa serves to reduce portfolio risk and volatility. By excluding mega-cap stocks and focusing on relatively smaller companies with an average market capitalization of $47 billion, DSTL offers investors a diversified exposure to the market while potentially limiting downside risk.

In terms of valuation, DSTL maintains a cheap valuation compared to broader market indices like the S&P 500 and Nasdaq-100. This attractive valuation not only presents investors with the opportunity for capital gains but also enhances the impact of potential dividend payments and share buybacks from the underlying holdings of the fund.

Despite its strong track record of outperforming benchmarks like the S&P 500, DSTL faces competition from other value ETFs that have demonstrated similar success. Pacer ETFs and Avantis offer alternative ETF options with strong performance histories, posing a challenge to DSTL’s dominance in the market.

Ultimately, DSTL’s combination of a cheap valuation, robust performance track record, and focus on cash-flow generating companies makes it a compelling investment choice for investors seeking exposure to the U.S. equity market. While considerations like sector allocations and competition from other ETFs exist, DSTL remains a solid option for those looking to capitalize on the fund’s proven strategy and potential for continued outperformance.