Balance, diversification, and quality, no matter what the market is doing – that’s the goal of TMFE.
View in browser
Motley Fool Asset Management
Morningstar 5 Star rating based on risk adjusted returns as of 03/31/2025 out of 1,027 Large Cap Growth funds-with-disclosure-2025-03-31

 

Dear Dominic,

 

Did you know that in 2023, professional investors’ most common primary reason for investing in smart beta ETFs was to mitigate risk?¹

 

You (or your competitors) might be among this majority – and it makes sense! You want your index funds to give your clients stability, no matter the market environment.

 

That’s why The Motley Fool Capital Efficiency 100 Index ETF (TMFE) is driven by a smart beta formula to identify Capital Efficiency. 

 

It’s designed to filter out capital-INefficient investments, narrowing down the pool to a blend of companies whose impressive, reliable track records could set them up for potential long-term success.

Discover TMFE

We believe well-run, high-quality companies can make the smartest investments, no matter the market environment.

TMFE gives investors exclusive access to the top 100 most capital-efficient companies recommended by the analysts at our parent company, The Motley Fool, LLC, using a proprietary smart beta formula. 

 

This formula, developed by The Motley Fool, LLC Investing Intelligence Team, pinpoints 100 companies that meet their strict criteria for three quality factors for Capital Efficiency – profitability, growth, and stability.

 

From our perspective, capital-efficient companies demonstrate a unique potential to navigate an uncertain world, minimize volatility, deliver value to customers, and hopefully generate meaningful gains to shareholders like your clients.

------

We believe your index funds should have standards.

By standards, we mean quality standards, unlike your generic market-cap weighted funds that rely on size and/or sector as primary criteria for their holdings.

 

Before a company even meets TMFE’s smart-beta formula…

 

It first begins by analysts from The Motley Fool, LLC giving their active recommendation to their newsletter subscribers. They dedicate significant hours researching and recommending what they believe to be some of the highest-quality companies in the marketplace today. 

Which means each and every holding in TMFE is reviewed and hand-selected by a real person, adding an ADDITIONAL quality checkpoint.

Quality checkmark

You know that’s not all...

------

TMFE also adds an additional diversification layer on top.

Each security in TMFE is capped at 4.8% to decrease single security risk and give investors greater sector exposure.

 

Discover the Foolish difference! Find out what TMFE’s quality-seeking, smart beta approach could potentially do for your clients.

Discover TMFE

Sincerely,

The Fools at Motley Fool Asset Management

 

P.S. Companies that deliver stable profits and growth can hopefully deliver the same for your clients’ portfolios. Discover what TMFE has to offer.

01 https://www.statista.com/statistics/1191734/etf-top-reason-smart-beta-use-worldwide/

©2025 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. The Morningstar RatingTM for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-ended funds, and separate accounts) with at least a three-year history. Exchange-trade funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sale loads. The top 10% of products in each product category receive 5 stars, the next 22.25% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-. five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/ 40% three-year rating for 60-119 months of total returns, and 50% 10-year rating / 30% five-year rating / 20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

 

The Motley Fool Capital Efficiency 100 ETF was rated against the following numbers of Large Growth funds over the following time periods: 1,020 funds in the last three years. As of March 31, 2025 The Motley Fool Capital Efficiency 100 ETF (TMFE) is rated 5 stars for the three-year period and has an Overall Morningstar Rating™ of 5 stars. Past performance is no guarantee of future results.

 

Motley Fool Asset Management’s ETFs are each a series of The RBB Fund, Inc. and are distributed by Quasar Distributors, LLC.

 

The investment advisor for each fund is Motley Fool Asset Management, LLC (“MFAM”). MFAM is a wholly owned subsidiary of Motley Fool Investment Management, LLC, whose parent company, The Motley Fool Holdings, Inc., which is a multimedia financial-services holding company.

 

The Capital Efficiency 100 Index was established by TMF in 2021 and is a proprietary, rules-based index designed to track the performance of the highest scoring stocks of U.S. companies, measured by a company’s capital efficiency, that have been recommended by TMF’s analysts and newsletters, and that also meet certain liquidity requirements. Capital efficiency is a measure of how a business turns its investments into revenue and profit and it provides insight into the company’s return on invested capital. The S&P 500 Index is a stock market index based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ. You cannot invest directly in an index.

 

Investing involves risk. Principal loss is possible. This Fund invests primarily in particular market capitalizations, including small cap stocks, thus its performance will be especially sensitive to market conditions that particularly affect smaller capitalization companies. The Fund is non-diversified, which means its NAV, market price and total returns may fluctuate or fall more than a diversified fund. Gains or losses on a single stock may have a greater impact on the Fund. For these and other reasons, there is no guarantee the Fund will achieve its stated objective.

 

Please consider the charges, risks, expenses, and investment objectives carefully before you invest. Please see the prospectuses for the Motley Fool Global Opportunities ETF, the Motley Fool Mid Cap Growth ETF, the Motley Fool 100 Index ETF, the Motley Fool Small Cap Growth ETF, the Motley Fool Next Index ETF and the Motley Fool Capital Efficiency 100 Index ETF containing this and other information. Read it carefully before you invest or send money.

 

NON-U.S. RESIDENTS AND APPLICABLE LAW. The Site is hosted in the United States of America. MFAM and their representatives may transact business only in states where they are registered, excluded, or exempted from state registration requirements. MFAM makes no representations or warranties that the pages or other materials on the Site are appropriate for use outside the United States. If you choose to access the Site from a location outside the United States, you do so at your own risk and are responsible for complying with all applicable local laws. No investment product or service referred to on this site is intended to be made available in any country or other jurisdiction where such availability (or offer or sale of such product or service) would violate applicable laws or regulations. This Site will not be considered a solicitation for or offering of any investment product or service to any person in any jurisdiction where such solicitation or offering would be illegal.

 

MFAM, an affiliate of The Motley Fool, LLC (“TMF”), is a separate legal entity. Neither of TMF co-founders, Tom Gardner and David Gardner, nor any other TMF analyst is involved in the investment decision-making or daily operations of MFAM.

Motley Fool Asset Management, 2000 Duke Street, Suite 275, Alexandria, VA 22314

Unsubscribe Manage preferences