The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  Brookstone Growth Stock 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 inexperienced portfolio management team drives the strategy's Below Average People Pillar. The strategy gets an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a substantial overweight position in liquidity exposure and has a significant underweight in momentum exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And low momentum exposure is rooted in holding stocks that are not currently on a winning streak and instead holding those that managers believe are undervalued. The strategy's parent organization still has a way to go to reach the industry standard, evidenced by insignificant personal investments from portfolio managers and portfolio managers with limited tenures at the firm. As a result, the firm obtains a Below Average Parent Pillar rating.

Analyst Rating

NVIDIA

Amazon

Netflix

EOG Resources

QUALCOMM

Alphabet

Teradyne

Uber

Tyler Technologies

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. Brookstone Growth Stock ETF earns an Average Process Pillar rating. 

The most important driver of the rating is the firm's five-year retention rate of 100% over the period. The scale of the portfolio management team also reinforces the process. With five portfolio managers, the fund is well-staffed. Lastly, the process is limited by the experience of the management team, which averages four years at this fund.

 This strategy skews toward smaller, deeper value companies compared with its average peer in the Large Growth Morningstar Category. Looking at additional factor exposure, this strategy has consistently tilted toward companies with relatively higher trading volumes in the last few years. More-liquid assets are easier to buy and sell without adversely moving their prices and tend to provide some ballast during market selloffs. They also are easier to sell to meet redemptions if a host of investors decide to leave the fund in a short period of time. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. This strategy has had lower exposure to momentum stocks over peers in recent years. Momentum tends to be a powerful force in asset markets, as stocks that have done well recently usually continue to do so in the short term. As top performers change, this can sometimes be hard to capture without higher trading costs. Similarly, in recent months, the strategy also had less exposure to the Momentum factor than peers. In addition, this strategy's holdings have included more companies with high dividend or buyback yields than peers over these years. High-yield stocks tend to be connected to more mature companies earning enough cash to return some to shareholders. At times, however, extreme market pressure can force them to cut their dividends, which hurts stock performance. In this month, the strategy also had more exposure to the Yield 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 consumer defensive and communication services relative to the category average by 3.8 and 2.9 percentage points, respectively. The sectors with low exposure compared to category peers are consumer cyclical and healthcare, underweight the average by 5.1 and 2.8 percentage points of assets, respectively. The strategy owns 31 securities and is diversified among those holdings. In its most recent portfolio, 38.1% of the strategy's assets were concentrated in the top 10 fund holdings, as opposed to the category’s 53.2% average.

Average

Process

Brookstone Growth Stock ETF earns a Below Average People Pillar rating. The team benefits from the firm's five-year retention rate of 100%. However, the rating is limited by the experience of the management team, which averages four years at this fund. The number of months that the management team has been running this vehicle together also holds the rating back. Since this is a newly incepted product, more time is needed to monitor the team's capability at executing the strategy.


The team is backed by Mark W. DiOrio, the longest-tenured manager on the strategy, who provides 17 years of listed portfolio management experience.  Although the team size is solid, together they are largely unproven. With four additional supporting listed managers, the team averages four years of listed portfolio management experience.

Below Average

People

Brookstone Asset Management, with only six months of history as a firm, is too nascent to prove whether it has an edge over the competition, leading to a Below Average Parent Pillar rating. The firm currently manages eight vehicles, with a total of $337.5 million under management across a bench of five strategy managers. The management team at Brookstone Asset Management is unproven. Because the team members average just over four years in the industry, there's reason to be cautious until they grow more seasoned. The firm's earliest portfolio manager hire, Mark W. Diorio, has 17 years of industry experience. 
 
   

 As Brookstone Asset Management builds and continues to develop a track record, its rating will be adjusted accordingly.

Parent

Brookstone Growth Stock ETF

BAMG actively selects US companies with strong earnings growth potential based on proprietary and third party research. It selects both mid- to large-cap stocks with a focus on the latter.

AdvisorShares Dorsey Wright Micro-Cap ETF

Advisorshares Let Bob AI Powered Momentum ETF

SPDR S&P 500 ETF Trust

Brookstone Active ETF

Brookstone Intermediate Bond ETF

Brookstone Dividend Stock ETF

Brookstone Opportunities ETF

Brookstone Ultra-Short Bond ETF

Brookstone Value Stock ETF

Brookstone Yield ETF

Ishares Transition-Enabling Metals Etf

It was another strong week for launches, with 21 new ETFs added to the industry count. That number includes funds from Capital Group, Dimensional, American Century, BlackRock, J.P.

This Week in ETFs: FormulaFolios Renamed, Adds New Funds

News for Brookstone Growth Stock ETF ETF (BAMG)