Morgan Dempsey Large Cap Value ETF (MDLV)

The Morgan Dempsey Large Cap Value ETF (MDLV) invests in large American companies — typically the biggest 500 to 1000 firms by market value — that are trading at low valuations by traditional measures such as price-to-earnings ratios, price-to-book ratios, and dividend yields.

Fund type	Equity ETF (actively managed or rules-based)
Market coverage	Large-cap U.S. equities
Strategy	Value screening — low P/E, P/B, high dividend yield
Number of holdings	Typically 40–80 stocks
Expense ratio	Mid-single-digit basis points
Dividend yield	Usually 2–4%, higher than broad market
Turnover	Moderate; rebalanced annually or semi-annually
Investor profile	Income-focused, contrarian, long-term holders

The value proposition

Value investing rests on a straightforward idea: some stocks trade below what they are rationally worth because of temporary pessimism, recent poor performance, or simple inattention. By buying those discounted assets and waiting for prices to normalize, investors can earn superior returns with less downside risk than buying the market as a whole.

MDLV operationalizes this by screening the large-cap universe for securities exhibiting value characteristics. Companies with high earnings yields (equivalently, low price-to-earnings ratios), low price-to-book ratios, high dividend yields, and sometimes positive earnings growth or insider buying are candidates. The fund then holds a concentrated portfolio of these selections, either through a rules-based mechanical index or through human security selection, depending on the fund’s structure.

The appeal is intuitive. In a bull market dominated by expensive growth stocks and technology darlings, value stocks often lag. But in bear markets, when investors seek safety and income, value stocks stabilize better. Over very long periods, value stocks have delivered comparable returns to growth with lower volatility — a better risk-adjusted outcome.

How MDLV differs from the broader market

The S&P 500 or total U.S. market is weighted by market capitalization, so the largest companies (Apple, Microsoft, Nvidia, Tesla, etc.) dominate. These mega-cap growth stocks typically trade at high valuation multiples because investors expect strong earnings growth. MDLV, by contrast, screens these out in favor of cheaper, often more mature companies. A typical MDLV portfolio might hold more of companies like traditional energy firms, large banks, industrial manufacturers, and consumer-staples producers — sectors that trade at lower multiples but often pay higher dividends.

This shift in composition matters. In periods when growth outpaces value (as happened for much of the 2010s and early 2020s), MDLV will trail the broad market. In periods when the market favors cheaper, dividend-paying stocks, MDLV will outpace the S&P 500. An investor in MDLV is making a bet that value characteristics offer genuine long-term return advantages and that mean reversion — where cheap stocks become less cheap over time — will eventually reward patience.

Risks and constraints

Valuation traps. A company can be cheap for good reason. It might be in a structurally declining industry (printing, coal, traditional retail), facing technological disruption, or saddled with an uncompetitive cost structure. A low P/E ratio does not guarantee the market has mispriced the stock; it may simply reflect rational pessimism. Value funds can hold onto such stocks for years, watching them decline further.

Growth drag. In periods where growth stocks significantly outperform (such as the 2010s and early 2020s), value funds underperform the broad market and lose investors money in real terms even if they beat their value-stock peers. This can create performance anxiety and lead investors to abandon the strategy at precisely the wrong time.

Concentration. With typically 40 to 80 holdings, MDLV is more concentrated than a total-market index fund. If two or three positions suffer earnings shocks simultaneously, the impact can be material.

Dividend uncertainty. Value stocks are often chosen because they pay high dividends. But dividends can be cut, especially during economic downturns. A company paying a 4 percent yield could see that yield rise to 6 or 8 percent as the stock price falls following a dividend cut — a sign of deteriorating business, not a bargain.

Who MDLV suits

MDLV appeals to investors with long time horizons who believe that value stocks offer attractive risk-adjusted returns and who can tolerate periods of underperformance. It suits those seeking income (the higher dividend yield compared to the broad market is a real difference). It attracts contrarian temperaments — those willing to own what the market dislikes in the moment, betting on eventual recognition of worth.

It is less suitable for those building a passive, diversified core portfolio (a total-market fund is simpler and more transparent), for those with short time horizons (a downturn can last years), or for those bullish on growth and technology.

Evaluating MDLV

Review the fund’s holdings and note the sectors and company types represented. Check the valuation metrics of the portfolio — the average P/E, P/B, and dividend yield — and compare them to the broad market to confirm the fund is indeed holding cheaper stocks. Examine rolling returns over a full decade or more, paying particular attention to periods of value underperformance and whether those were eventually reversed. Look at the fund’s annual turnover and tax-efficiency; high trading activity can erode after-tax returns for taxable accounts. Read the manager’s quarterly commentary on where value is finding the most opportunity and which sectors the fund is rotating into. Finally, consider your own conviction: if you believe value offers long-term reward and you can live with near-term underperformance, MDLV is a straightforward implementation of that thesis.