For financial advisors seeking high-conviction exposure to large-cap equities, the Touchstone US Large Cap Focused ETF (ticker: LCF) aims to offer a distinct edge. The fund marries fundamental value investing with modern business analysis, concentrating on high-quality companies trading below intrinsic value. LCF stands apart by focusing on sustainable competitive advantages—economic moats that allow businesses to generate superior returns over time.
In a recent conversation with The Wealth Advisor’s Scott Martin, Jamie Wilhelm, Managing Director and Senior Portfolio Manager at Fort Washington Investment Advisors, sub-advisor of LCF, explained how his team connects valuation analysis with durable business fundamentals, seeking to deliver long-term outperformance.
Rethinking Value: From Deep Discounts to Durable Advantages
LCF doesn’t follow the well-worn playbook of deep value investing. Instead, Wilhelm and his team target quality businesses—including some in the technology sector—that offer long-term value, even if they don’t look “cheap” by conventional standards.
“We adapted years ago and thought a lot of these big cap tech companies were interesting,” Wilhelm says. “So, we adjusted the way we think about value, not the traditional deep value lens that a lot of value managers have managed over a long period of time.”
The team’s approach blends the discipline of value investing with a more modern lens—especially relevant in a market where innovation and intangible assets increasingly drive enterprise value.
“We have a truly Buffet-like way of thinking versus, I think, a lot of people that claim [they do but] really don’t,” Wilhelm adds, highlighting the team’s nuanced interpretation of famed value investor Warren Buffett’s principles. It’s not about copying stock picks—it’s about embracing a mindset that links intrinsic value to business strategy.
Barriers to Entry: The Core of the Investment Thesis
At the heart of LCF’s strategy is an evaluation of economic moats—specifically, entry barriers that protect a company’s market share and long-term profitability.
According to Wilhelm: “We think about barriers from the standpoint that they are different; some barriers are more formidable than others. For example, network effects combined with customer captivity is a really high barrier to entry versus a company whose product’s use is more habitual.”
These companies can sustain high returns on capital because competitors struggle to erode their advantages. Habit-forming usage patterns also create defensibility, though to a lesser extent. “We think about that when we buy businesses,” he points out. “How formidable the barrier to entry is.”
More than a checklist, the framework feeds directly into valuation. “Our valuation methodology allows you to link the valuation conversation with the business strategy conversation or set other barriers to entry,” says Wilhelm. The integration of qualitative and quantitative analysis is what he calls “the secret sauce.”
“I think that’s really the competitive advantage we believe we have,” he affirms.
High Conviction, Actively Managed
LCF holds about 45 positions, reflecting a concentrated portfolio built on conviction rather than benchmarks. “As far as the sector weights, we tend to be pretty broadly diversified,” Wilhelm notes. LCF targets companies with market capitalizations above $5 billion, favoring liquidity without sacrificing quality.
“Utilities are tough because valuations are always typically pretty expensive,” he adds, acknowledging sectors the team tends to avoid. “And then, we don’t own businesses that we don’t deem have some form of barrier to entry.”
When valuations stretch and bargains are scarce, the team is comfortable sitting on cash. “You have to be patient sometimes,” Wilhelm notes—echoing the discipline that underpins the team’s process.
Modern Valuation for a Modern Market
Instead of relying on standard metrics such as price/earnings ratios or earnings multiples, the LCF team uses a refined discounted cash flow (DCF) approach that adjusts for how modern companies, especially in tech, spend capital.
“Certain parts of the expense base of some of these tech companies really should be treated as an investment, just like a capital expenditure, and basically treated as R&D and therefore amortized over a long period of time,” Wilhelm explains. “So, you really need to make these proper adjustments when you’re buying some of these larger-cap tech companies, and that definitely makes a difference in terms of the lens you’re looking through when you value them.”
Why Advisors Should Care: Active Management That Adds Value
In an environment dominated by passive investing, LCF offers something different: active management with a defined process and consistent philosophy.
“It’s an active product. The goal is to outperform the index,” Wilhelm says. “It’s got a high percentage of names in the top 10. A good alternative to passive investing, in my view, as an alpha generator or as kind of a core fund holding in a client’s portfolio.”
High active share combined with rigorous stock selection means LCF doesn’t simply hug the benchmark—it aims to beat it through differentiated positioning and deep analysis.
Positioning Amid Market Optimism
Wilhelm acknowledges that markets have already absorbed a lot of future growth. But even in a fully valued environment, opportunities remain.
“We think, at this point, a lot of future value creation is priced into the overall market,” he says. “We’re pricing in a reasonable amount of future value creation, but that doesn’t mean you can’t find bottom-up opportunities.”
Instead of chasing the broad market, Wilhelm and his team focus on identifying a select group of undervalued companies. “That doesn’t mean the portfolio we have is not trading at an attractive level. We’re just trying to find 40, 45 names that we think are at a discount to intrinsic value,” he says.
Looking ahead, Wilhelm sees room for skilled managers to stand out. “I think active managers, truly active managers who have reasonably high active share and combine that with a really good process can win over time,” he says.
In other words, the market may be broadly efficient—but not perfectly so. For advisors and clients looking for targeted alpha, LCF aims to offer a process-driven way to seek mispriced opportunities without relying on market timing or short-term bets.
For Advisors: What to Know About LCF
The ETF launched in July 2022, but its underlying strategy has a much longer mutual fund track record. As of September 2025, LCF held 47 positions and maintained 96.3% equity exposure, with approximately $52.7 million in assets under management. Its benchmark is the S&P 500 Index.
For advisors, LCF offers more than a fund—it offers a story to tell. The emphasis on business quality, competitive advantage, and intrinsic value gives advisors real substance when explaining portfolio decisions to clients. “It is a portfolio of high-quality businesses, businesses with higher returns on capital, and combined with that, businesses that have higher barriers to entry, that allow those high returns on capital to stay in place,” as Wilhelm says. “And it’s all wrapped into a portfolio that we believe is selling at a discount to intrinsic value.”
With its disciplined framework, concentrated approach, and distinct take on valuation, LCF might serve as a differentiated core holding or as a complement to passive exposures. For clients who value thoughtful stock selection and long-term compounding, LCF seeks to deliver a compelling alternative.
Active with Purpose
Touchstone’s LCF ETF isn’t just another large-cap fund. It reflects a deliberate, disciplined approach to investing—rooted in value, informed by business strategy, and adapted to the realities of today’s market. Wilhelm and his team bring a Buffett-inspired mindset to stock selection, backed by a valuation methodology that aims to uncover mispriced quality.
For advisors, that might translate into a differentiated portfolio strategy built to stand the test of time—and potentially outperform passive peers.
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The Fund invests in equities which are subject to market volatility and loss. The Fund invests in stocks of large-cap companies which may be unable to respond quickly to new competitive challenges. The Fund invests in stocks of mid-cap companies which may be subject to more erratic market movements than stocks of larger, more established companies. The Fund is non-diversified, which means that it may invest a greater percentage of its assets in the securities of a limited number of issuers and may be subject to greater risks.
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