Bill Mann, chief investment strategist at Motley Fool Asset Management, joined Nate Geraci on this week’s ETF Prime to discuss three factor ETFs launched in December. The firm now offers nine ETFs with over $2.5 billion in assets.

Despite 90% of new ETFs launched in 2025 being active, Motley Fool chose systematic index-based strategies for the three new funds. The Motley Fool Innovative Growth ETF (MFIG), the Motley Fool Value Factor ETF (MFVL), and the Motley Fool Momentum Factor ETF (MFMO) use proprietary data from the Motley Fool’s 30-plus years of investment research, according to Mann.

The firm’s flagship fund, the Motley Fool 100 Index ETF (TMFC), has outperformed the S&P 500 by about 230 basis points per year since its 2018 launch, Mann said. The strong performance gave the firm credibility to expand into additional large-cap strategies.

Redefining Value

Mann challenged traditional definitions of value investing. When people hear value, they think of low-quality companies or cyclicals, Mann said. The entire Motley Fool universe focuses on high-quality companies for long-term holding. Within their selection universe, value refers to companies with specific return and volatility profiles rather than statistical value definitions.

Mann noted that investors need to understand their own risk tolerance, which tends to be past-dependent. Being under-indexed to the Magnificent Seven has been difficult recently, but investors are increasingly looking to lower exposure to those top-heavy names.

Christopher Tessin, founder and managing partner at Acuitas Investments, discussed the launch of the Acuitas Small Cap Active ETF (AIMS). The multi-manager fund brings 15 years of institutional small- and microcap expertise to retail investors. Small-caps have shown momentum as the Russell 2000 gained 22% over the past six months compared to 10% for the S&P 500.

Tessin expressed optimism for small-caps in 2026, citing earnings expectations that are higher for small-caps than large-caps. Large-cap valuations are at peak levels while small-caps offer better value and serve as targets for private equity dry powder.

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