Tweedy, Browne makes its century-old value pitch to ETF investors

Tweedy, Browne's value pitch begins in 1920, when the firm served as Ben Graham's broker. In an interview with VettaFi, published by ETF Trends, managing directors Jay Hill and Jason Minard trace that lineage to an office in the same building as Graham. The method they describe still carries the label 'Ben Graham big idea': stocks are interests in businesses, and each share has two prices—the market quote and a common-sense intrinsic value. Buying at a discount to that value is the margin of safety.

Minard said the framework leads the firm to buy at steep discounts and sell as price approaches value. Hill made the case for value investing on behavioral grounds: humans overreact to negative news, so the firm sorts overreaction from genuine deterioration.

The interview never mentions an ETF, and no filing is described. What it offers is the rationale for one. Active stock funds have taken in $272.5 billion, according to ETF Daily. The S&P 500's dividend yield has fallen to 1.08%, its lowest since July 2000. Investors hungry for income have turned to options-writing funds; Tweedy, Browne's message is the inverse: the yield is in the price. Whether the firm wraps that message in an ETF is unconfirmed. But a value manager that once handled Graham's brokerage has a biography that fits the active ETF sales pitch, and this interview reads like the opening of it.