The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  Brookstone Yield 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 most expensive 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. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in the Europe-Developed region and has a significant overweight in the communication services sector compared with category peers. 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 relatively short-tenured portfolio managers. As a result, the firm obtains a Below Average Parent Pillar rating.

Analyst 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. Brookstone Yield 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 bolsters the rating. 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.

 Its equity sleeve is consistently tilted toward both larger market-cap and growth-oriented companies compared with category peers. The strategy has three region or sector biases compared to category peers. The most meaningful is its consistent underweight in the Developed Europe region. It also routinely positions more assets in the communication services 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 and communication services relative to the category average by 13.6 and 3.8 percentage points, respectively. The sectors with low exposure compared to category peers are financial services and healthcare, underweight the average by 7.9 and 3.6 percentage points of assets, respectively. The portfolio is overweight in North America by 12.9 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 5.4 percentage points and Japan similar to the average.

 For the portfolio's bond allocation, interest rate risk exposure is being managed higher than comparable managed products in this category. However, compared with peers, credit risk has been somewhat lower. More concretely, the fund’s average credit rating is AA compared with the category average’s BBB but has a longer average duration of 16.8 years to the average’s 5.1 years.

Average

Process

Brookstone Yield 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.


Mark W. DiOrio, the longest-tenured manager on the strategy, boasts 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 Yield ETF

BAMY is an actively managed fund-of-funds that seeks to provide current income through a combination of equity and fixed income securities from around the globe. The fund advisor has wide flexibility in relative weightings to asset classes.

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