Weakness in Bahl & Gaynor Income Growth ETF's People and Process Pillar ratings limits this strategy to a Morningstar Medalist Rating of Negative. The portfolio maintains a sizable cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The longest-tenured manager has a wealth of experience, but due to other weaknesses, the strategy earns a Low People Pillar. The strategy earns a Below Average Process Pillar rating, the result of a recent pillar upgrade from Low. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in liquidity exposure and has an overweight in quality exposure compared with category peers. Low liquidity risk exposure is attributed to stocks with a low trading volume, limiting managers' flexibility. And a high quality exposure is rooted in holding stocks that are consistently profitable, growing, and have solid balance sheets. To be considered a quality steward, this strategy's parent organization needs to improve factors like an uncompetitive firmwide success ratio and a poor risk-adjusted track record. The firm currently obtains a Below Average Parent Pillar rating, the result of a recent pillar downgrade from Above Average.

Analyst Rating

Broadcom

Eli Lilly

Merck

Eaton

AbbVie

PepsiCo

Mondelez

Procter & Gamble

NextEra Energy

Chevron

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. Bahl & Gaynor Income Growth ETF earns a Below Average Process Pillar rating. 

The process benefits from the firm's five-year retention rate of 89% over the period. However, the rating is weakened by the fund's weak long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the process has struggled over that period. The parent firm's five-year risk-adjusted success ratio of 0% also weakens the process. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's subpar success ratio suggests that the firm could do better across its fund lineup.

 This strategy tends to hold larger, higher-growth companies than its average peer in the Large Value Morningstar Category. Looking at additional factor exposure, this strategy consistently held some companies with relatively lower trading volume compared with Morningstar Category peers in the last few 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 the latest month, the strategy was also less exposed to the Liquidity factor compared with Morningstar Category peers. This strategy also has tilted in favor of high-quality stocks, those that have demonstrated low financial leverage and solid return on equity, during these years. High exposure to the quality factor means holding companies that are consistently profitable, growing, and have solid balance sheets. Compared with category peers, the strategy also had more exposure to the Quality factor in the most recent month. In addition, the portfolio has tended to underweight yield, as shown in its lower exposure to companies that pay dividends or buy back shares than peers over these years. This is demonstrated by the portfolio's low exposure to dividends or buybacks. While companies with high yields provide steady income payments, they may cut payouts if their earnings decline. 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 technology and consumer defensive relative to the category average by 4.4 and 3.7 percentage points, respectively. The sectors with low exposure compared to category peers are financial services and communication services, underweight the average by 7.2 and 5.7 percentage points of assets, respectively. The portfolio is positioned across 54 holdings and is quite concentrated. More concretely, 39.8% of the portfolio's assets are housed within the top 10 holdings, as opposed to the category’s 27.4% average. And finally, in terms of portfolio turnover, looking at year-over-year movements, 4% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Below Average

Process

Bahl & Gaynor Income Growth ETF earns a Low People Pillar rating. The most notable detractor from the rating is the parent firm's five-year success ratio of 0%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median return for the period. The parent's subpar success ratio suggests that the firm could do better across its fund lineup. The managers' failure to consistently outperform peers at the funds they run, as measured by their combined three-year manager excess returns, also holds the rating back. The size of the portfolio management team detracts from the team further, with two portfolio managers at the helm.


Peter M. Kwiatkowski, the longest-tenured manager on the strategy, provides strong guidance, bringing forward 22 years of listed portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 1.7 stars, reflecting below-average risk-adjusted performance compared to category peers. None of the managers here invest any money in the strategy, which is disappointing, as such investments help align managers' interests with fundholders.

People

Bahl & Gaynor lags peer asset managers in a number of stewardship qualities, resulting in a Below Average Parent Pillar rating. The firm has struggled to provide a durable product shelf, with only a 0% five-year success ratio, meaning that only 0% have both survived and beaten their respective category median. A low success ratio not only indicates weak performance but also raises flags about a firm’s discipline around investment strategy and product development. The Bahl & Gaynor roster of open-end and exchange-traded funds has had below-average risk-adjusted performance, as shown by its average overall Morningstar Rating of 1.7 stars. The firm charges fees on its open-end and exchange-traded funds that are on par with category peers. On average, fees on its funds are within the middle quintile, giving it neither an advantage nor disadvantage compared with the competition.

Parent

Bahl & Gaynor Income Growth ETF

BGIG is actively managed, investing in US large cap companies with a reliable dividend stream. The fund uses a bottom-up approach to select companies that are perceived to have strong fundamentals.

The Bahl & Gaynor Income Growth ETF (NYSE Arca: BGIG) began trading on the New York Stock Exchange today. The actively managed ETF invests primarily in dividend-paying U.S.-listed equity securities of large-cap companies.

News for Bahl & Gaynor Income Growth ETF ETF (BGIG)