Dodd Kittsley

Dodd Kittsley has been in ETFs since the late 1990s, when there were just 32 products and less than $40 billion in total assets. He started doing independent third-party ETF research at Morgan Stanley and helped build one of the first ETF research teams on Wall Street. From there, he worked at some of the largest ETF issuers, including BGI (the predecessor to iShares), where he arrived after the business had already reached critical mass. He now heads distribution and strategy for Davis Funds, which was founded in 1969 and got into ETFs in 2017.

On this episode, recorded live at the Exchange ETF conference, Dodd talks with Brad about Davis's research-driven approach to concentrated active management, their two ETFs (DUSA and DWLD), and why he believes vehicle choice should be about client preference rather than ideology.

Three Generations of Research-Driven Investing

Davis has an unusual lineage. It was founded by Shelby Davis, who made his fortune investing exclusively in equities, primarily financial stocks. His son, also named Shelby, became a legendary institutional investor before being approached about offering his institutional strategy in a mutual fund wrapper. His initial reaction was: "We don't do that. We're an institutional shop." But he reconsidered, and Davis Advisors was born. Now in its third generation of leadership with Chairman Chris Davis, the firm has expanded from mutual funds into SMAs (2000s) and ETFs (2017), always using the same investment discipline across every vehicle.

Chris Davis has a famous standard: the firm wants to be in the "top decile of knowledge" about every company they own and the industries those companies operate in before investing a single dollar. They knew Google years before it went public. That level of deep fundamental research, built on relationships with management teams, customers, and competitors, is what Dodd believes gives Davis a genuine edge that can't be replicated by stock screens or quantitative models.

DUSA: 22 Best Ideas

DUSA (Davis Select US Equity ETF) holds just 22-23 stocks at any given time, making it one of the most concentrated actively managed ETFs in the large cap equity space. The portfolio is 100% conviction-weighted. Dodd is clear: they are "benchmark agnostic," meaning they will never buy a stock or true up a sector just because the benchmark has exposure there. DUSA currently has zero weight in three or four S&P 500 sectors because Davis doesn't see enough opportunity there.

The portfolio skews toward what Dodd calls "GARP" (Growth at a Reasonable Price) rather than pure value, even though many investors think of Davis as a value shop. The fund owns Meta alongside JP Morgan, combining secular growth companies with traditionally valued names. Turnover is very low by design because the team does its homework upfront and looks for long-term compounders, not stocks that will pop next quarter. When you own only 22 names, each position represents a high-conviction bet backed by extensive fundamental research.

DWLD: The Most Unconstrained Portfolio

DWLD (Davis Select Worldwide ETF) is the firm's most unconstrained portfolio, holding roughly 35 names with no geographic constraints. Currently, it runs about 50% US and 50% international, though that split fluctuates based on where the team finds the best opportunities globally. It's an analog to the Davis Global Fund, which has been running for a couple of decades.

Dodd positions DWLD as a way for advisors to get Davis's best global ideas in a single, concentrated vehicle. He notes that international equities have been deeply out of favor with US advisors, but some of the best businesses in the world are headquartered outside the US. For advisors looking to add non-US exposure through a high-conviction active manager rather than a broad international index, DWLD gives them a focused portfolio of Davis's best ideas regardless of geography.

Vehicle Agnostic: Why Davis Offers Mutual Funds, SMAs, and ETFs

Dodd makes an interesting case for maintaining all three vehicle types. Davis positions itself as "vehicle agnostic," offering mutual funds, SMAs, and ETFs to give clients choice based on their specific needs. He points out that mutual funds still have advantages: easy dollar-cost averaging, less frequent holdings disclosure (which can help with less liquid securities), and the psychological benefit for some investors of not seeing their holdings fluctuate in real-time. ETFs offer tax efficiency and intraday liquidity. SMAs offer customization. The investment process is identical across all three; only the wrapper differs.

Key Takeaways

• DUSA holds just 22-23 stocks, is 100% conviction-weighted, and has zero exposure to three or four S&P 500 sectors where Davis doesn't see opportunity.
• Davis wants to be in the "top decile of knowledge" about every company they own before investing, relying on deep fundamental research built over years of relationships with management teams.
• Dodd was among the first ETF researchers on Wall Street in the late 1990s when there were just 32 products and under $40 billion in total ETF assets.
• DWLD holds roughly 35 names with about 50/50 US-international split, representing Davis's most unconstrained global best-ideas portfolio.
• Davis maintains mutual funds, SMAs, and ETFs with identical investment processes, positioning itself as vehicle-agnostic and leaving the wrapper choice to client preference.

Listen to the full conversation on Spotify, Apple Podcasts, or YouTube.