Weakness in Alternative AccessFirstPriorityCLO BdETF's Process and People Pillar ratings limits this strategy to a Morningstar Medalist Rating of Negative. The portfolio maintains a sizable cost advantage over competitors, priced within the second-lowest fee quintile among peers.  

 The strategy earns a Low Process Pillar rating. The portfolio management team managing the strategy earns a Low People Pillar rating. To be considered a quality steward, this strategy's parent organization needs to improve factors like portfolio managers with limited tenures at the firm and above-average turnover among its portfolio managers. As a result, the firm obtains a Low Parent Pillar rating.

Analyst Rating

Morningstar's style-agnostic investment process evaluation looks for strategies that should be able to outperform their Morningstar Category index on a risk-adjusted basis over time. AlternativeAccessFirstPriority CLO BdETF earns a Low Process Pillar rating.    The most significant detractor from the rating is the parent firm's five-year risk-adjusted success ratio of 26%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup. Turnover at its parent firm also detracts from the process. The firm's asset-weighted manager tenure of three years suggests it could do more to retain portfolio managers. Management team experience, which averages four years at this fund, detracts from the rating as well.

 The investment strategy as stated in the fund's prospectus is as follows: 


The investment seeks capital preservation and income.  The fund is an actively-managed exchange-traded fund (“ETF”). Under normal circumstances and it invests at least 80% of its net assets (plus any borrowings for investment purposes) in AAA rated first priority debt tranches of U.S. dollar-dominated collateralized loan obligations (“CLOs”). It may invest in CLOs of any maturity. The fund is actively managed and does not seek to track the performance of any particular index.

 This strategy's 12-month yield is 6.3%, higher than its average peer's 4.8%. Typically, higher yields come at the cost of higher credit risk.

Process

AlternativeAccessFirstPriority CLO BdETF earns a Low People Pillar rating. The most substantial detractor from the rating is the parent firm's five-year success ratio of 26%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median return for the period. The parent's modest success ratio suggests that the firm could do better across its fund lineup. Management team experience, which averages four years at this fund, also holds the team back. The parent firm's five-year retention rate of 48% weakens the team further.

People

AXS fails to meet industry-standard stewardship qualities, culminating in a Low Parent Pillar rating. Longest-tenured managers have three years of average asset-weighted tenure, which is slim compared with peer firms. In isolation, this doesn't bode well as the current managers have limited experience running strategies. AXS management has lacked continuity over the past five years, denoted by higher-than-average portfolio manager turnover, which detracts from the firm's stewardship rating.

Parent

AXS First Priority CLO Bond ETF

AAA seeks to provide income by actively selecting USD-denominated, investment-grade collateralized loan obligations, or CLO bonds, of any maturity.

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News for AXS First Priority CLO Bond ETF ETF (AAA)