New Valuation-Weighted ETF Offers Forward Looking Alternative

The Diamond Hill Valuation-Weighted 500 ETF (DHVW) is a smart alternative to classic S&P 500 funds because it is forward-looking and focuses on intrinsic value, said Ric Dillon, CEO of Diamond Hill Capital Management. Dillon added that traditional market cap-weighted indexes are based on current price and can overweight overvalued securities and underweight those that may be undervalued. He said Diamond Hill's ETF starts with a universe of the 700 largest U.S.-listed companies and estimates the intrinsic value for each. It then takes the 500 largest of these companies into the fund and weights them according to their intrinsic values.