Towle & Co. Debuts Towle Value ETF (TCV): A Contrarian Play on Small Caps

How the Towle Value ETF Works

The Towle Value ETF (TCV) takes an active approach to finding what Towle & Co. calls “Value Companies” — public businesses trading at less than 1.5 times enterprise value-to-sales when first added to the portfolio.

The strategy is focused on smaller-cap, cyclical names that the market has largely overlooked.

Towle looks for companies that may be temporarily out of favor but have clear potential for earnings growth and revaluation over time.

Most of the portfolio is invested in U.S. equities, but the fund has the flexibility to allocate up to 25% to foreign companies via American Depositary Receipts (ADRs).

It typically holds between 30 and 100 stocks, with an emphasis on sectors where even modest performance improvements could drive strong upside.

As a non-diversified fund, TCV can take meaningful positions in select areas where the team sees the most value.

Why Invest in TCV ETF?

In a market environment defined by elevated valuations, macro instability, and rising geopolitical risk, the Towle Value ETF (TCV) offers a focused and disciplined approach to small cap value investing.

At the core of TCV is a proprietary framework known as The Towle Way, built on three guiding principles:

• Buy Demand: Seek out companies with real revenue and solid fundamentals that are trading at steep discounts, creating potential for revaluation as margins improve.
• Buy Before: Identify businesses positioned for positive change before the market catches on, aiming to invest ahead of key catalysts.
• Buy In: Accept volatility as part of the process. Staying patient and disciplined through market cycles is essential to unlocking long-term value.

This approach leads TCV to companies that are often overlooked or misunderstood. Rather than chasing trends or leaning into overvalued segments of the market, the fund focuses on deep research and high-conviction ideas.

Because TCV is actively managed, it can adjust to changing conditions, from rate shifts and earnings resets to broader trade and policy shifts.

About Towle & Co.

Founded in 1981, Towle & Co. is a privately-owned, independent investment firm headquartered in Denver. Specializing in deep value investing, Towle & Co. serves both institutional and individual clients through managed accounts, a mutual fund, and now, the Towle Value ETF. The Towle family and employees are among the largest investors in their own strategies, reinforcing the firm’s alignment with client interests. For more information, visit www.towleetfs.com. 

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.