The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  Brookstone Value Stock ETF to a Morningstar Medalist Rating of Negative.  Fees are a weakness here. The strategy's lofty fees are a high hurdle to clear, as it is priced within the second-highest quintile among peers.  

 The strategy's inexperienced portfolio management team drives the strategy's Below Average People Pillar. The strategy earns an Average Process Pillar rating.  High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And a low quality exposure is rooted in stocks with higher financial leverage and lower profitability. To be considered a quality steward, this strategy's parent organization needs to improve factors like unsubstantial 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

Wells Fargo

Goldman Sachs

NextEra Energy

Fidelity National Information

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Exxon Mobil

Chevron

Disney

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 Value Stock ETF earns an Average Process Pillar rating. 

The main 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 supports 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 leans toward larger, more growth-oriented companies compared with its average peer in the Large Value Morningstar Category. Looking at additional factor exposure, the fund has held stocks with higher trading volumes compared to Morningstar Category Peers in the past few years. More-liquid assets contribute to more-flexible exit strategies without price changes and tend to be a ballast during market selloffs. For example, if the portfolio faces successive redemptions in a short period of time, it will be less likely to suffer from a significant loss. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. This strategy has also favored low-quality stocks. This means the fund avoids holding companies that are consistently profitable, growing, and have solid balance sheets. Lacking this ballast, the fund's prospects could rest on its ability to beat peers during economic booms. Similarly, in recent months, the strategy also had less exposure to the Quality factor than peers. Furthermore, this strategy has leaned toward low-yield stocks over recent years, holding fewer companies with high dividend or buyback yields. Returning capital to shareholders often is not the highest priority of such businesses. The shares of such companies can deliver strong returns if they fulfill their growth projections, but they also carry more risk. In recent months, the strategy also had less Yield factor exposure than 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 healthcare by 4.5 percentage points in terms of assets compared with the category average, and its financial services allocation is similar to the category. The sectors with low exposure compared to category peers are industrials and consumer defensive, with industrials underweighting the average portfolio by 2.7 percentage points of assets and consumer defensive similar to the average. The strategy owns 31 securities and is quite concentrated. More concretely, 37.4% of the strategy's assets are housed within the top 10 holdings, compared to the typical peer's 27.4%.

Average

Process

Brookstone Value Stock ETF earns a Below Average People Pillar rating. The team is supported by 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.


Mark W. DiOrio, the longest-tenured manager on the strategy, provides strong guidance, bringing forward 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 Value Stock ETF

BAMV actively selects US companies with strong value based on external and internal research. It selects both mid- to large-cap stocks.

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