DUHP ETF

Quality approach investments remain appropriate in the current environment, historically delivering returns in line with the broader market but with lower volatility. Dimensional US High Profitability ETF offers a diversified allocation, including technology, industrials, healthcare, and consumer staples. DUHP's stock selection provided a gain in terms of profitability, while valuation remains near the level of the broader index and other quality ETFs.

DUHP is an actively-managed large-cap blend ETF emphasizing high-quality stocks, as measured by earnings relative to book value or assets. Expenses are 0.22% and DUHP has $5.66 billion in assets. DUHP is also broadly-diversified, with exposure to 85/160 GICS sub-industries. Total Magnificent Seven exposure is only 14.54%, as DUHP excludes Alphabet, Amazon, Meta Platforms, and Tesla. DUHP serves as an excellent complement to JQUA. With only 38% overlap, an equal-weight portfolio of these two ETFs is better-diversified than SPY while offering investors a slightly lower P/E.

In pursuit of capital appreciation, actively managed DUHP favors large-size, solidly profitable U.S. companies. Since my April 2023 note, DUHP has delivered an impressive return, which I believe was predominantly driven by the IT sector and the growth factor. DUHP has a lot to offer regarding profitability but not much growth, and its performance is lagging a bit compared to JQUA and QUAL.