The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  PMV Adaptive Risk Parity ETF to a Morningstar Medalist Rating of Neutral.  The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.  

 The strategy's management team is about as experienced as others, but due to other weaknesses, the strategy earns a Below Average People Pillar. The strategy earns an Average Process Pillar rating.  To be considered a quality steward, this strategy's parent organization needs to improve factors like a lack of inside investments from portfolio managers and a cohort of unseasoned portfolio managers. As a result, the firm obtains a Below Average Parent Pillar rating.

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Morningstar's style-agnostic evaluation of this fund's process seeks to understand whether the strategy has a performance objective and sensible, clearly defined, repeatable execution. Pmv Adaptive Risk Parity 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 size of the portfolio management team also contributes to the process. With three portfolio managers, the fund is reasonably well-resourced. Lastly, the process is limited by the experience of the management team, which averages seven years at this fund.

 Its equity sleeve has a meaningful tilt toward both larger market-cap and growth-oriented companies as opposed to the category average. The strategy has three region or sector biases compared to category peers. The most notable is its consistent underexposure to the healthcare sector. Also, currently, the portfolio has less assets allocated toward the Australasia region. However, this has not been persistent as it hasn't been observed over time in prior portfolios. 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 and communication services relative to the category average by 13.6 and 4.6 percentage points, respectively. The sectors with low exposure compared to category peers are financial services and industrials, underweight the average by 6.7 and 4.1 percentage points of assets, respectively. The portfolio is overweight in North America by 15.0 percentage points compared with the category average, and Emerging Europe's allocation is similar to its peers. The regions with low exposure compared to their category peers are Developed Europe and Japan, with Developed Europe underweight the average by 5.9 percentage points and Japan similar to the average.

 In the fund’s bond sleeve, interest rate risk exposure is more significant than comparable managed products in this category. However, this strategy has done so while taking on less credit risk. Specifically, the portfolio exhibits a higher average credit rating of AAA in contrast to the category average’s BB but has a longer average duration of 15.2 years versus the average of 4.6 years.

Average

Process

Pmv Adaptive Risk Parity ETF earns a Below Average People Pillar rating. The team benefits from the strategy's reasonable fees, which rank in its category's second most expensive fifth. Although that could still be improved, it is better than some of the funds in this category and a positive contributor to the rating. However, the rating is weakened by the number of months that the management team has been running this vehicle together. Since this is a newly incepted product, more time is needed to monitor the team's capability at executing the strategy. Management team experience, which averages seven years at this fund, also holds the team back.

Below Average

People

PMV is a relative newcomer with only a one-year record. There have yet to be signs suggesting that PMV is a topnotch steward. As a result, it is assigned a Below Average Parent rating until there's contrary evidence. PMV currently oversees one vehicle and a bench of three fund managers.   

 PMV does not differentiate itself on costs. Across the open-end and exchange-traded product lineup, its average net expense ratio places it in the middle quintile of firms.  

 To upgrade the firm's rating, PMV will be expected to build a consistent track record of positive investor experience.

Parent

PMV Adaptive Risk Parity ETF

ARP is an actively managed fund-of-funds that allocates to a variety of asset classes: global equities, fixed-income securities, commodities, and currencies based on risk parity.

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PMV Capital Advisers has launched the PMV Adaptive Risk Parity ETF (NYSE Arca: ARP), an actively managed fund that seeks to generate capital appreciation, with lower volatility and reduced correlation to the overall equity market, by taking advantage of broad asset class trends throughout the market cycle.

PMV Capital Advisers Launches Adaptive Risk Parity ETF

DALLAS , Dec. 22, 2022 /PRNewswire/ -- "We see an opportunity in the marketplace for an all-weather strategy that has low correlation to the broad stock market," said Portfolio Manager Daniel Snover, CFA. "Investors today are looking for ways to diversify their portfolio beyond traditional stock and bond positions.

News for PMV Adaptive Risk Parity ETF ETF (ARP)