Weakness in AdvisorShares Hotel ETF's People and Process Pillar ratings limits this strategy 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 team managing the strategy earns a Below Average People Pillar. The strategy gets a Below Average Process Pillar rating.  Low quality exposure is attributed to stocks with higher financial leverage and lower profitability. And momentum exposure is rooted in holding stocks currently on a winning streak. To be considered a quality steward, this strategy's parent organization needs to improve factors like a bench of relatively inexperienced portfolio managers and an unstable portfolio manager lineup. As a result, the firm obtains a Low Parent Pillar rating.

Analyst Rating

Xenia Hotels & Resorts

Marriott

Booking Hlds

Expedia

Park Hotels & Resorts

Ryman Hospitality Properties

Target Hospitality Corp

TripAdvisor

Apple Hospitality REIT

Host Hotels & Resorts

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. AdvisorShares Hotel ETF earns a Below Average Process Pillar rating. 

The process is bolstered by the experience of the management team, which averages 22 years at this fund. However, the rating is held back by the parent firm's five-year retention rate of 15%, which suggests it could do more to retain its portfolio managers. The parent firm's five-year risk-adjusted success ratio of 50% also weakens the process. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup.

 This strategy, over time, has preferred smaller market-cap companies, compared with others in the Consumer Cyclical Morningstar Category.  But in terms of style (value/growth) exposure, it is similar. Examining additional factor exposure, this strategy tilts consistently toward stocks with lower quality or the shares of companies with more financial leverage and lower profitability, compared with Morningstar Category peers over the past few years. Such positions do not tend to provide much ballast for a portfolio. In the latest month, the strategy was also less exposed to the Quality factor compared with Morningstar Category peers. This strategy has also demonstrated more exposure to high-momentum stocks over peers in recent years. Momentum strategies wager that market outperformers will continue to outperform, and laggards will continue to lag. Higher exposure to the former could mean the managers are overweighting stocks on winning streaks. Compared with category peers, however, the strategy had less Momentum factor exposure in the latest month. Given the low trading volume of holdings, this strategy has also tilted toward illiquid assets during these years. Less-liquid stocks might offer strong returns to compensate for their risks, but they can be harder and more expensive to trade in bear markets. In recent months, the strategy also had less Liquidity 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 real estate by 24.5 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 consumer cyclical and consumer defensive, underweight the average by 11.3 and 4.4 percentage points of assets, respectively. The strategy owns 26 securities and is quite concentrated. Specifically, 49.7% of the fund’s assets are housed within the top 10 holdings, versus the category’s 45.5% average. And in closing, in terms of portfolio turnover, looking at year-over-year movements, 120% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Below Average

Process

AdvisorShares Hotel ETF earns a Below Average People Pillar rating. The team is strengthened by the experience of the management team, which averages 22 years at this fund. However, the rating is held back by the instability of management across its parent firm. The firm's asset-weighted manager tenure of four years suggests it could do more to retain portfolio managers. The parent firm's five-year success ratio of 50% also weakens the team. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup.

People

AdvisorShares fails to meet industry-standard stewardship qualities, culminating in a Low Parent Pillar rating. A notable weakness of AdvisorShares is the inexperience of its longest-tenured managers compared with other asset managers. Managing capital through a full market cycle is a challenging prospect for seasoned managers, but with only about four years of average asset-weighted tenure, there's cause for concern. A detractor from the firm's rating is its lower-than-average portfolio management retention over the past five years, as elevated turnover bears watching. The firm's risk-adjusted performance compares similarly to competitors. Across all open-end and exchange-traded funds, the firm's average five-year Morningstar Rating is 3.5 stars, which is about standard.

Parent

Advisorshares Hotel ETF

BEDZ is an actively managed ETF that provides exposure to US hotels, resorts, cruise lines and their sub-industries.

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News for Advisorshares Hotel ETF ETF (BEDZ)