AAM Todd International Intrinsic Value ETF (TIIV)

The AAM Todd International Intrinsic Value ETF (TIIV) is an actively managed exchange-traded fund that invests in undervalued stocks across developed and emerging markets outside the U.S., applying a disciplined value-investing framework to identify securities trading below their estimated intrinsic worth.

TIIV originated from America’s Alpha Management (AAM), a smaller asset manager focused on value-oriented strategies, in partnership with the Todd family—a notable name in value-investing circles. The fund represents a deliberate bet that international equity markets frequently misprice securities, creating opportunities for an analyst team willing to do deep fundamental work and wait for prices to converge with value.

The founding thesis and value-investing approach

The fund was built on a core conviction: international markets are less efficiently priced than U.S. markets because they attract fewer sell-side analysts, less media coverage, and often less institutional ownership. This information gap creates anomalies where a well-researched stock can trade far below what a careful intrinsic-value calculation suggests it should be worth.

The intrinsic-value method is straightforward in concept but demanding in practice. Analysts project a company’s future cash flows, estimate a reasonable growth rate, and discount those future cash flows back to a present value using an appropriate discount rate. That calculated present value is the stock’s intrinsic worth. If the current market price is well below intrinsic value, the stock is added to the portfolio; if price catches up to value or rises above it, the position is trimmed. The process is entirely bottom-up — the fund builds its portfolio company by company rather than by forecasting sectors or regions.

Evolution and regional focus

In its early years, TIIV concentrated heavily on emerging markets, where pricing inefficiencies and discrepancies between intrinsic and market value are often widest. Over time, as the fund’s assets grew and markets evolved, the team expanded into developed-market Europe and Japan, where it found similar mispricings in smaller, less-followed companies.

The current portfolio typically holds 50-100 stocks spread across 20+ countries. Geographic weighting shifts based on where the managers find the best opportunities — sometimes Asia, sometimes Latin America, sometimes Europe — rather than targeting fixed regional quotas. Holdings have ranged from tiny micro-cap stocks in emerging markets that trade thinly to larger-cap European industrials or Japanese exporters.

The selection process and research intensity

TIIV’s competitive edge rests on the depth of fundamental analysis. The AAM and Todd investment teams conduct original research: meeting company management, studying supply chains, analyzing financial statements, and building detailed models of each prospect. This is labor-intensive work — a single investment idea might require a month of analysis to validate.

The fund’s annual portfolio turnover is typically moderate (around 30-50%), reflecting a buy-and-hold philosophy rather than active trading. Managers are willing to hold positions for years if they believe the market is still mispricing the intrinsic value. This low turnover keeps transaction costs down and is favorable for tax efficiency, though it means the fund sometimes holds unpopular stocks for extended periods while waiting for recognition.

Valuation discipline and the margin of safety

Like all intrinsic-value approaches, TIIV applies a margin of safety — the team only buys when the market price is materially below the calculated intrinsic value, not just slightly below. The margin varies but is typically 20-40%, ensuring that even if the team’s valuation is slightly optimistic, there is a buffer before capital is at risk.

This discipline means the fund often holds no positions for weeks or months if nothing in the market meets the threshold. In booming markets where stocks are richly valued everywhere, TIIV might be 20-30% in cash. In crashes where panic selling has driven prices far below reasonable fundamentals, the fund might deploy most of its cash. This counter-cyclical behavior is central to the value-investing philosophy: be fearful when markets are greedy and greedy when markets are fearful.

Challenges and the value-trap risk

The largest challenge TIIV faces is value traps: stocks that are cheap for good reason. Sometimes a company’s intrinsic value is falling because its competitive position is deteriorating, industry consolidation is underway, or technology is rendering its products obsolete. A cheap stock that gets cheaper is a loss, not a bargain. The team’s research is meant to distinguish between true bargains and value traps, but the distinction is not always clear in real time.

A second challenge is long-period underperformance. Value investing is cyclical. In markets that favor growth stocks (high-growth tech companies, unprofitable disruptors), value stocks can lag for years. Investors in TIIV must be patient and willing to underperform in growth-dominated cycles, betting that the cycle will eventually reverse.

Currency risk is a third challenge specific to international value funds. An undervalued euro-denominated stock that gets cheaper in dollars because the euro falls is a double loss. TIIV is unhedged, so currency moves compound or offset the underlying stock performance.

Finally, liquidity can be an issue. Some of the fund’s holdings are small-cap stocks in emerging markets that trade infrequently. In market stress, selling these positions to meet fund redemptions can be costly or slow.

Performance and investor profile

TIIV’s long-term performance has been uneven — sometimes exceeding broader international indices, sometimes lagging, depending on whether value stocks were in or out of favor. The fund’s expense ratio is typically 0.8-1.2%, reflecting the research intensity and the cost of managing a value strategy across global markets.

The fund suits investors with a long time horizon (5+ years) who believe international markets offer genuine mispricings and are willing to be contrarian — holding cheap stocks when they are unpopular. It is not appropriate for investors who need steady, predictable returns or who cannot tolerate periods of significant underperformance.

Research and evaluation

Prospective investors should review TIIV’s fact sheet to see the current holdings, geographic breakdown, and valuation metrics (price-to-book, price-to-earnings, dividend yield) relative to broader international indices. Comparing the fund’s 5-year and 10-year performance against passively managed international value ETFs (such as Vanguard International Value Stock Index Fund, EAINT) reveals whether active management has added value.

The fund’s prospectus explains the intrinsic-value methodology in detail and clarifies the team’s approach to currency, leverage, and position sizing. Following the fund’s holdings over time and reading the annual commentary from AAM’s managers provides insight into the team’s thinking and whether their value-recognition calls are working out.

For a disciplined value investor comfortable with international equities, TIIV offers a rigorous, philosophy-driven approach that bets on the gap between price and worth.