The world economy has undergone profound changes over the last several decades, and we believe accounting rules have not kept up. This has rendered many traditional measures of value, quality, and risk unhelpful.

Distillate Capital has developed customized measures of value and quality, drawing on our decades of experience as fundamental investors, that are particularly relevant to today’s long-term investors interested in international markets. We utilize these measures in our investment process to exploit behavioral biases and minimize risk by eliminating stocks that are expensive, have volatile fundamentals, or are significantly indebted.

• International focus: seeks to deliver exposure to non-U.S. companies in both developed and developing international markets.
• Rationally-defined value: utilizes Distillate Capital’s proprietary normalized cash yield methodology, which focuses on the through-cycle durability of a company’s cash generation and indebtedness.
• Rationally-defined quality: focuses on long-term fundamental stability and leverage rather than short-term price volatility.
• Rationally-defined risk: is a combination of quality and the price paid, rather than a function of short-term stock price fluctuations.

DSTX is designed to offer investors exposure to an attractively valued portfolio of approximately 100 non-U.S. large- and mid-cap stocks that meet specific parameters including free cash flow-based valuation, long-term fundamental stability and balance sheet quality.