Increased confidence in Aptus Drawdown Managed Equity ETF's prospects relative to its Morningstar Category peers leads to an upgrade in this strategy's Morningstar Medalist Rating to Neutral from Negative. The portfolio maintains a sizable cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy's management team is about as experienced as others, but due to other weaknesses, the strategy earns a Low People Pillar. The strategy earns an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in yield exposure and has an overweight in quality exposure compared with category peers. Low yield exposure is attributed to holding fewer stocks with high dividend or buyback yields -- instead, typically holding companies with a stronger focus on growth opposed to returning capital. And a high quality exposure is rooted in holding stocks with low financial leverage and strong returns on equity. The strategy's parent organization doesn't stand out, earning the firm an Average Parent Pillar rating. It has displayed a handful of investor-friendly attributes including a competitive lineup success ratio but is held back by an unstable portfolio manager lineup.

Analyst Rating

Microsoft

Apple

NVIDIA

Alphabet

Amazon

Exxon Mobil

Visa

Caterpillar

JPMorgan Chase & Co

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. Aptus Drawdown Managed Equity ETF earns an Average Process Pillar rating. 

The most substantial contributor to the rating is the parent firm's five-year risk-adjusted success ratio of 100%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. The parent firm's superior risk-adjusted performance, as shown by its average overall Morningstar Rating of 3.5 stars, also strengthens the process. Lastly, the process is limited by the turnover of management across its parent firm. The firm's asset-weighted manager tenure of four years suggests it could do more to retain portfolio managers.

 This strategy skews toward larger, more growth-oriented companies compared with its average peer in the Long-Short Equity Morningstar Category. Looking at additional factor exposure, the managers have been consistently underweighting yield compared with the Morningstar Category peer over recent years. Its preference for stocks with lower yields may well lead to a growthier portfolio. However, growth stocks court additional risks if their forecasts do not come to fruition and are often more volatile than companies with stable dividends. In the latest month, the strategy was also less exposed to the Yield factor compared with Morningstar Category peers. This strategy also has had a position favoring high-quality stocks in recent years, which could contribute to higher downside risk protection. High exposure to the quality factor means holding companies that are consistently profitable, growing, and have solid balance sheets. Compared with category peers, the strategy also had more exposure to the Quality factor in the most recent month. Additionally, this strategy has demonstrated a preference for high-momentum stocks in these years. Momentum strategies wager that market outperformers will continue to outperform, and laggards will continue to lag. Higher exposure to the former could mean the managers are overweighting stocks on winning streaks. In this month, the strategy also had more exposure to the Momentum factor over its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in technology by 7.5 percentage points in terms of assets compared with the category average, and its real estate allocation is similar to the category. The sectors with low exposure compared to category peers are industrials and utilities, with industrials underweighting the average portfolio by 3.9 percentage points of assets and utilities similar to the average. The strategy owns 85 securities and is quite concentrated. In particular, 35.3% of the fund’s assets are housed within the top 10 holdings, versus the category’s 11.9% average. And in closing, in terms of portfolio turnover, on a year-over-year basis, 64% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Average

Process

Aptus Drawdown Managed Equity ETF earns a Low People Pillar rating. The main driver of the rating is the instability of management across its parent firm. The firm's asset-weighted manager tenure of four years suggests it could do more to retain portfolio managers. The combined average five-year excess return of each manager also holds the team back. It suggests that the funds they manage have trailed their respective category's average return. The experience of the management team, which averages five years at this fund, detracts from the rating as well.


The fund has had about average portfolio manager turnover compared to other teams. Long-term stability strengthens a team's rating as it tends to support positive results. However, the most recent documented departure was 18 months ago.

People

APTUS ETFs's track record as a steward is mixed, leading to an Average Parent Pillar rating. Longevity at the firm has been impressive. Its five-year risk-adjusted success ratio is 100%, meaning that 100% of the products have both survived and beaten their respective category median on a risk-adjusted basis. A high success ratio indicates good performance and provides insight into a firm’s discipline around investment strategy and product development. APTUS ETFs has undergone a bout of turnover in the past five years, as seen in its lower-than-average portfolio manager retention. This is a concern, as long-term stability tends to support positive results. APTUS ETFs's longest-tenured managers do not possess comparable experience as teams at other firms, a cause for concern. Specifically, average tenure within the firm is four years. As such, there is less confidence in the group's ability to manage capital through a full market cycle effectively.

Parent

Aptus Drawdown Managed Equity ETF 

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