Crossmark Large Cap Growth ETF (CLCG)

The Crossmark Large Cap Growth ETF (ticker CLCG) is an actively managed exchange-traded fund that holds large-cap growth companies selected through Crossmark Global Investments’ proprietary screens, which combine traditional growth metrics with values-based exclusion criteria. Unlike passive index funds that hold all large-cap growth stocks by weight, CLCG’s managers actively choose holdings and adjust the portfolio in real time based on research and conviction about which companies will outperform.

Active management in an ETF wrapper

CLCG operates as an open-end mutual fund that is also listed on an exchange, allowing it to trade intra-day like a stock while offering the tax and structural flexibility of an ETF. The distinction matters: a traditional mutual fund is priced once per day, but an ETF can be bought and sold continuously during market hours. For Crossmark, this ETF structure allows frequent rebalancing without the tax events that would occur in a non-ETF mutual fund structure.

Crossmark’s portfolio managers begin with the universe of large-cap growth stocks — companies with market capitalizations in the multi-billion range whose earnings or revenues are expected to grow faster than the broad market average. From there, they apply quantitative screens for valuation, momentum, profitability, and other growth signals. They also apply exclusion filters: the fund screens out companies that derive material revenue or profit from tobacco, abortion-related services, contraceptive products, or gambling, reflecting Crossmark’s values-based investment philosophy. These exclusions are explicit and disclosed in the fund documents, appealing to investors whose investment convictions extend beyond pure return maximization.

Holdings and the research process

At any given time, CLCG holds somewhere in the range of 40 to 60 large-cap growth stocks, significantly more concentrated than a passive large-cap growth index fund but far more diversified than a typical concentrated growth mutual fund. The managers rotate positions based on conviction, market valuations, and changes in company fundamentals. Because it is actively managed, the holdings will diverge from a plain index and the fund will hold cash or may lean overweight into certain sectors or stock characteristics depending on the managers’ outlook.

The research team combines fundamental analysis — reading earnings reports, meeting with management, visiting operations — with quantitative models that identify mispricing and opportunity. The fund prospectus does not reveal all of the managers’ screens and selection rules; some are proprietary. What is clear is that Crossmark aims to own high-quality growth companies trading at reasonable valuations, filtered through a disciplined set of principles about what kinds of business activities warrant investment capital.

Costs and performance attribution

The fund charges an annual expense ratio that is higher than a passive large-cap growth index ETF, a trade-off typical of active management. The higher fee reflects the cost of research, portfolio management, and trading activity. Whether that fee is justified depends on whether the managers’ stock-picking skill can generate outperformance above that fee — a question each investor must answer for themselves by examining the fund’s track record relative to its benchmark large-cap growth index and similar active funds over full market cycles (several years, not single years).

Because CLCG is actively managed, it also carries tax risk that passive index funds do not. Heavy buying and selling inside the fund can generate capital gains, which are passed through to shareholders and create tax liability. However, the ETF structure offers some insulation: the creation and redemption of shares in the primary market (the wholesale mechanism that connects ETF issuers to large institutional traders) can absorb most of the daily flows without the portfolio manager being forced to trade.

Risks and considerations

The primary risk is manager skill: if Crossmark’s portfolio managers cannot outperform the large-cap growth index by more than the fund’s fee, the investor would be better off buying a cheaper passive large-cap growth ETF. That risk is real and difficult to predict, because short-term performance is dominated by luck and randomness; only a long track record — five years or more — provides meaningful signal about genuine skill.

A second risk is that the exclusion filters may come at a cost. By ruling out certain sectors (particularly financials, which include money-lending and insurance companies that may have contraceptive coverage policies) and certain companies, the fund may miss some strong performers or concentrate exposure toward sectors and characteristics that underperform in certain market conditions. The values-based tilt is a feature, not a bug, for Crossmark’s target audience, but it comes with an opportunity cost that investors should be comfortable bearing.

Researching CLCG

A prospective investor should review the fund’s prospectus and fact sheet, paying close attention to the specific exclusion criteria and the current top 10 holdings. Next, look at the fund’s factsheet showing its performance relative to the large-cap growth index over at least three full years, ideally five or more, and compare its fee and turnover to peer active large-cap growth funds. Finally, consider the fund’s fit within a broader portfolio: is the values filter important to your investment convictions, or would a simpler passive large-cap growth fund serve the purpose at lower cost?