Adaptive Alpha Opportunities ETF's Average Process Pillar and People Pillar ratings result in a Morningstar Medalist Rating of Neutral. The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.  

 The strategy gets an Average Process Pillar. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in the United Kingdom region and the real estate sector compared with category peers. The strategy's industry-standard management team still needs to prove it has a competitive advantage and earns an Average People Pillar rating. The strategy's parent organization is industry standard, albeit with some strong attributes like low portfolio manager turnover, but is held back by unattractive fees. This earns the firm an Average Parent Pillar rating.

Analyst Rating

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Morningstar's evaluation of this fund's process seeks to understand management's investment philosophy, and whether it has been applied consistently over time and can add value across the market cycle. Adaptive Alpha Opportunities ETF earns an Average Process Pillar rating. The most significant contributor to the rating is the firm's five-year retention rate of 100% over the period. The stability of the management team also contributes to the process. Specifically, the fund has not seen a manager change in the last 11 years. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 25%. 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 subpar success ratio suggests that the firm could do better across its fund lineup.

This strategy invests more in equities than the typical peer with a 100% weighting, versus the Tactical Allocation category’s average of 46%. Its equity sleeve has a consistent bias toward both smaller market-cap and growth-oriented stocks versus the category average. The strategy has three region or sector biases compared to category peers. The most meaningful is its consistent underweight in the United Kingdom region. It also maintains an underweight bias to the real estate sector. And finally, in the fund's most recent portfolio, more assets were allocated to developed markets regions. Although, this bias has not existed over time. 

 The portfolio is overweight in technology by 21.3 percentage points in terms of assets compared with the category average, and its industrials allocation is similar to the category. The sectors with low exposure compared to category peers are financial services and healthcare, underweight the average by 6.4 and 3.8 percentage points of assets, respectively. The portfolio is overweight in North America by 15.4 percentage points compared with the category average, and Latin America's allocation is similar to its peers. The regions with low exposure compared to their category peers are Developed Europe and Japan, underweight the average by 5.9 percentage points and 2.7 percentage points, respectively.

Average

Process

Adaptive Alpha Opportunities ETF earns an Average People Pillar rating. The main contributor to the rating is the firm's five-year retention rate of 100%. The stability of the management team also strengthens the rating. Specifically, the fund has not seen a manager change in the last 11 years. Lastly, the rating is limited by the parent firm's five-year success ratio of 25%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median return for the period. The parent's subpar success ratio suggests that the firm could do better across its fund lineup.

People

In a competitive industry, Adaptive ETF doesn't differentiate itself enough, leading to an Average Parent Pillar rating. The firm has proven successful at retaining portfolio management talent, providing continuity for strategies, as displayed by low turnover in the past five years compared with asset management peers. The firm charges fees on its open-end and exchange-traded funds that are on par with category peers. On average, fees on its funds are within the middle quintile, giving it neither an advantage nor disadvantage compared with the competition. The firm has not had a durable product lineup. Specifically, its five-year risk-adjusted success ratio demonstrates that only 25% of products were both able to survive and beat their respective category median on a risk-adjusted basis. A low success ratio indicates poor performance and raises questions about a firm’s discipline around investment strategy and product development.

Parent

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AGOX is an actively-managed, multi-asset fund that tactically allocates for capital appreciation.

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