Crossmark Large Cap Value ETF (CLCV)

The Crossmark Large Cap Value ETF (CLCV) is an actively managed portfolio of established, cash-generating companies trading at valuations that suggest they are underpriced relative to their earnings power. Unlike a passive value index fund, which automatically holds the largest value-oriented stocks by capitalization weight, CLCV’s managers select holdings through proprietary fundamental research combined with the same values-based exclusion screens that define Crossmark’s family of socially responsible funds.

The value investment thesis in an ETF

Value investing rests on a simple premise: that the market sometimes prices good companies below their intrinsic worth, creating an opportunity for patient investors. CLCV’s managers define value stocks as companies with strong earnings and cash flows, attractive dividend yields, low price-to-earnings or price-to-book ratios, and sustainable competitive advantages, typically in mature industries like banking, energy, consumer staples, industrials, and utilities. These are not growth companies — they are not expected to double in revenue in the next few years — but they are profitable, stable, and often misvalued by a market obsessed with faster-growing alternatives.

The ETF structure allows Crossmark to rebalance frequently without triggering the tax events that would occur inside a traditional mutual fund. Shares of the ETF trade on an exchange during market hours at a price set by supply and demand, and the fund itself can be created or redeemed in large blocks by institutional players, keeping the market price tethered to the net asset value of the underlying stock portfolio.

Screening and selection

The portfolio managers begin with the large-cap value universe — publicly traded companies with substantial market capitalizations classified as value stocks by standard metrics. They apply quantitative screens for valuation (earnings yield, price-to-book), quality (return on equity, stability of earnings), and yield (dividend sustainability), then overlay fundamental research: reading filings, analyzing competitive positioning, and assessing management quality. Positions are weighted by conviction; a stock the managers believe is severely underpriced may receive a larger holding than an index-weighted approach would give it.

Crossmark also applies strict exclusion filters across the portfolio. Companies deriving material revenue from tobacco, gambling, abortion services, or contraceptive production are screened out, a disciplinary lens that appeals to values-conscious investors and shapes the fund’s actual holdings. In the value space, this primarily excludes certain financial companies and energy plays, which narrows the opportunity set but focuses the fund on enterprises the sponsors believe warrant capital.

Performance and risk considerations

An actively managed fund’s success depends entirely on whether the managers’ stock-picking skill exceeds the drag from higher fees and trading costs. CLCV’s expense ratio is higher than a passive value index ETF’s, and that fee must be earned through genuine outperformance. Historical performance across several market cycles is the only meaningful test; any single year or two is largely noise.

Value investing also carries style risk. In long periods when growth stocks outperform (as occurred through much of the 2010s and early 2020s), value funds underperform by definition. An investor who buys CLCV during a growth cycle may see years of disappointing returns even if the fund’s manager is skillful, simply because value itself is out of favor. Conversely, when the cycle turns and value re-rates, concentrated value positions can deliver strong gains.

The exclusion filters add another dimension. By ruling out significant sectors and companies, the fund foregoes exposure to potential winners in those industries. A controversial energy company or a large bank that profits from products some values-based investors oppose will never be in the portfolio. For aligned investors, this is entirely the point. For others, it represents opportunity cost.

Tax considerations and trading

As an ETF, CLCV benefits from an efficient structure for daily flows. Large institutional investors can purchase or redeem shares at net asset value without creating taxable events for other shareholders — a distinct advantage over non-ETF mutual funds in taxable accounts. However, because the fund is actively managed and the portfolio managers buy and sell positions based on research signals and valuations, some capital gains will be realized and distributed each year. The exact tax impact depends on the manager’s turnover rate and the specific positions sold.

Researching CLCV

Start with the fund’s prospectus and latest fact sheet, which detail the exclusion criteria and the composition of the current portfolio. Review performance data over at least three full years (ideally five or more) against a passive large-cap value benchmark, and compare the fund’s fee and turnover to similar active value funds. Consider whether the values-based filter aligns with your own investment convictions, and whether you are willing to accept potential opportunity cost in exchange for that alignment.

Finally, understand that value investing requires patience. In any single year or two, the fund may trail a broad stock index. That does not mean the manager has failed or the strategy is broken — only that market fashions have shifted. True evaluation requires time and emotional discipline.