Barron's 400 ETF earns a Morningstar Medalist Rating of Neutral with strength in areas such as Process offset by weaker spots such as People. The portfolio maintains a sizable cost advantage over competitors, priced within the second-lowest fee quintile among peers.  

 The team managing the passive strategy earns a Below Average People Pillar. The strategy's investment approach stands out and earns an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in quality exposure and has an overweight in yield exposure compared with category peers. A high quality exposure means holding stocks that are consistently profitable, growing, and have solid balance sheets. And a high yield exposure is rooted in holding high dividend-paying or buyback stocks. Although this strategy's parent firm still has a way to go to be a high-quality steward, it has bright spots like portfolio managers who invest a notable amount in their strategy but could focus on a relatively inexperienced portfolio management team. As a result, the firm has a Low Parent Pillar.

Analyst Rating

Encore Wire

United Continental Hlds

Coupang

Gigacloud Tech

Tecnoglass

Freeport-McMoRan

BuildABear

Boot Barn Hlds

Williams-Sonoma

Warrior Met Coal

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. Barron's 400 ETF earns an Above Average Process Pillar rating. 

The main contributor to the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Impressive risk-adjusted performance also strengthens the process. This can be seen in the fund's five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 43%. 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 modest success ratio suggests that the firm could do better across its fund lineup.

 This strategy does not differentiate itself from its Mid-Cap Blend category peers in terms of size and style exposure. Looking at additional factor exposure, this strategy has consistently had a defensive tilt owing to its exposure to high-quality stocks over the past few years. High exposure to the quality factor means holding companies that are consistently profitable, growing, and have solid balance sheets. In recent months, the strategy was more exposed to the Quality factor compared with its Morningstar Category peers as well. The managers have also tended to overweight yield during recent years, shown by the portfolio's high exposure to dividends or buybacks. Stocks with high yields can be more stable, mature companies, but at times extreme market pressure or fundamental deterioration may prompt them to cut their dividends, which tends to hurt stock performance. Compared with category peers, the strategy also had more exposure to the Yield factor in the most recent month. In addition, this strategy has exhibited a tilt toward higher-volatility stocks in these years, meaning companies that have a higher historical standard deviation of returns compared with peers. Such exposure tends to pay off when markets are hot and to be costly when they are not. In this month, the strategy also had more exposure to the Volatility 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 energy and financial services relative to the category average by 8.8 and 5.8 percentage points, respectively. The sectors with low exposure compared to category peers are real estate and healthcare, with real estate underweighting the average portfolio by 5.7 percentage points of assets and healthcare similar to the average. The portfolio is composed of 398 holdings and its assets are more dispersed than peers in the category. In particular, 4.3% of the portfolio's assets are concentrated in the top 10 fund holdings, compared to the typical peer's 15.4%. And in closing, in terms of portfolio turnover, looking at year-over-year movements, 83% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Above Average

Process

ALPS’s team receives a Below Average People Pillar rating. The team benefits from the combined average three-year excess return of each manager, which shows that the funds they manage have outperformed an average manager. However, the rating is limited by the parent firm's five-year success ratio of 42%. 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 modest success ratio suggests that the firm could do better across its fund lineup. The parent firm's five-year retention rate of 62% also limits the team.

Below Average

People

ALPS has a ways to go to become an industry-standard steward, resulting in a Low Parent Pillar rating. Despite the negative rating, an area of strength of the firm is manager investment.  Over 34% of the firm's assets are covered by invested managers, in an effort to align portfolio manager and shareholder interests. With an average asset-weighted tenure of eight years among the longest-tenured managers at ALPS, the firm is on par with peers. Seasoned teams tend to have more experience to draw upon should they need to weather turbulent market conditions. The firm charges fees on its open-end and exchange-traded funds that are on par with category peers. On average, fund fees on its products fall in the middle quintile, giving it neither an advantage nor disadvantage compared with the competition.

Parent

ALPS Barron's 400 ETF

BFOR tracks an equally weighted index comprising 400 US companies selected on fundamental parameters.

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The ALPS Barron's 400 ETF (BFOR) outperformed broader equity markets last week, as measured by the Russell 3000 Index, due to its higher quality growth-at-a-reasonable-price (GARP) fundamentals across its all-cap portfolio. As earnings season begins, BFOR is substantially overweight to pro-cyclical sectors, including energy, industrials, financials, and materials (23.

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The idea of growth at a reasonable price (GARP) is an appealing investment strategy, but applying it at the single stock level can be tricky. The Barron's 400 ETF (NYSEArca: BFOR) is an exchange traded fund that makes GARP investing easy and relevant for a broad swath of investors.

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When it comes to investment factors, market participants often believe they must decide between growth and value or spread bets around to access both factors. The Barron's 400 ETF (NYSEArca: BFOR) eases that burden by presenting investors with an efficient avenue to the concept known as growth at a reasonable price (GARP).

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