A strong management team and sound investment process underpin Brandes International ETF's Morningstar Medalist Rating of Gold. The portfolio maintains a sizable cost advantage over competitors, priced within the second-lowest fee quintile among peers.  

 The strategy’s management team earns a High People Pillar rating. The strategy's sensible investment philosophy earns an Above Average Process Pillar rating.  High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And momentum exposure is rooted in holding stocks currently on a winning streak. The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Banco Santander

UBS Group AG

WPP Plc Sponsored

ING Group 6.2 % Perpetual Debt Secs 2003-Without Fixed Called for red.on 16.10.17 at USD 25

GlaxoSmithKline

HEICO

Emergent BioSolutions

Tractor Supply

Ormat Technologies

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. Brandes International ETF earns an Above Average Process Pillar rating. 

The main driver of the rating is the firm's five-year retention rate of 88% over the period. The parent firm's five-year risk-adjusted success ratio of 76% also strengthens 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. Their relatively high success ratio suggests that the firm does well for investors and that this fund may benefit from that. Lastly, the process is limited by being an actively managed strategy. Historical data, such as Morningstar's Active/Passive Barometer, finds that actively managed funds have generally underperformed their passive counterparts, especially over longer time horizons.

 This strategy has more exposure to the Growth factor than the Foreign Large Value Morningstar Category average. But in terms of size exposure, it does not have much of a bias and resembles the typical portfolio. Looking at additional factor exposure, the fund has held stocks with higher trading volumes compared to Morningstar Category Peers in the past few years. This gives the managers more flexibility during bear markets to sell without adversely affecting prices. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. This strategy has also demonstrated more exposure to high-momentum stocks over peers in recent years. Momentum is based on the premise that market outperformers will continue to outperform, and laggards will continue to lag. This means that managers are overweighting stocks currently on a winning streak. Compared with category peers, the strategy also had more exposure to the Momentum factor in the most recent month. In addition, this strategy has not maintained a defensive tilt, demonstrated by low exposure to the quality factor. This means the fund avoids holding firms 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. In recent months, the strategy also had less Quality 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 consumer defensive and healthcare relative to the category average by 10.5 and 8.1 percentage points, respectively. The sectors with low exposure compared to category peers are industrials and financial services, underweight the average by 7.1 and 6.7 percentage points of assets, respectively. The portfolio is composed of 65 holdings and is quite concentrated. In particular, 27.2% of the fund’s assets are housed within the top 10 holdings, versus the category average of 14.4%.

Above Average

Process

Brandes International ETF earns a High People Pillar rating. Brent V. Woods’s veteran status, with over 25 years of listed portfolio management experience, brings a wealth of experience to the table. The average Morningstar Rating of the strategies they currently manage is 3.7 stars, indicating that their risk-adjusted returns outperformed the category average. Brent V. Woods is supported by an experienced team, being able to draw on four additional listed managers, who average 21 years of listed portfolio management experience. As a team, they manage four investment vehicles together, with a Silver asset-weighted average Morningstar Medalist Rating, demonstrating their potential to deliver positive alpha in aggregate. None of the portfolio managers here invest in this fund. This hurts the rating because manager investment would align their interests with the strategy's investors.

 Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

High

People

Brandes is a stable asset management firm centered around a single investment philosophy applied with discipline and patience. The firm earns an Above Average Parent rating.
Brandes is a small independent asset manager based in San Diego, founded by Charles Brandes in 1974. He retired in 2018 and no longer has any role at the firm. He also exited the partnership, but he is still due payments for his interests in the firm until 2029. The ownership transfer is self-funded by the firm and its existing partners, preserving the firm's independence and its sound investment culture. The planned transition to a new CEO slated for May 2024 is unlikely to shake things up. Firm veteran Oliver Murray—currently global head of client services—will replace Brent Woods, who has led the firm for the past 10 years. Woods will remain at Brandes, becoming president of the firm’s general partner with Murray reporting to him. Woods will also remain a fund manager at the firm. A series of promotions were made in conjunction, including a newly created role of director of research and the addition of three limited partners. 
We have no reason to believe the firm’s good culture will be challenged through the CEO transition. Brandes has stuck to its deep-value style over time even as assets under management have declined sharply since 2008 because of subdued performance and hefty outflows. According to senior management, the firm remains profitable, and its investment capabilities have been safeguarded. Brandes benefits from a pool of seasoned fund managers and analysts with very long tenures. It’s not rare that investment personnel spend the bulk of their careers at the firm. Teamwork is clearly emphasized with several investment committees running the strategies, which reduces key-person risk. 
Compared with appropriate value indexes, the firm’s fund range has performed well on average in the long run, though the emerging-markets equity strategy and the small fixed-income products have delivered mixed results. Another area of improvement would be to formally link the managers' variable compensation to the funds' performance. Our concerns are alleviated by the firm's co-investment policy, whereby fund managers must invest in the funds alongside investors.

Parent

Brandes International ETF

BINV is actively managed, investing in equity securities of companies who perform their business activities outside the US. The fund seeks securities that are perceived to be undervalued.

Brandes US Small-Mid Cap Value ETF

Brandes US Value ETF

Eagle Capital Select Equity ETF

GMO US Quality ETF

Firms should offer ETF products because investor demand is not slowing down, according to one Goldman Sachs ETF expert.

Why Goldman Sachs is helping its clients launch ETFs

Goldman Sachs Group's recently created business designed to help firms quickly launch exchange-traded funds has more than just traditional asset managers as clients.

Hedge funds, family offices among those turning to Goldman Sachs ETF Accelerator

ASYMshares ASYMmetric 500 ETF

WisdomTree Chinese Yuan Strategy Fund

WisdomTree Germany Hedged Equity Fund

Innovator US Equity 5 to 15 Buffer ETF-Quarterly

Foundations Dynamic Core ETF

Foundations Dynamic Growth ETF

Foundations Dynamic Income ETF

Foundations Dynamic Value ETF

Formula Folios Hedged Growth ETF

FormulaFolios Smart Growth ETF

FormulaFolios Tactical Growth ETF

FormulaFolios Tactical Income ETF

Innovator Premium Income 9 Buffer ETF-October

iShares iBonds Dec 2023 Term Muni Bond ETF

WisdomTree India ex-State-Owned Enterprises Fund

KraneShares CICC China Leaders 100 Index ETF

KraneShares Emerging Markets Healthcare Index ETF

Innovator Premium Income 15 Buffer ETF-October

Asymmetric Smart Income ETF

Innovator Premium Income 10 Barrier ETF - October

Innovator Premium Income 20 Barrier ETF - October

Innovator Premium Income 30 Barrier ETF - October

Innovator Premium Income 40 Barrier ETF - October

WisdomTree Modern Tech Platforms Fund

Advocate Rising Rate Hedge ETF

SPDR S&P 500 ETF Trust

WisdomTree U.S. Growth and Momentum Fund

Innovator US Equity 10 Buffer ETF

Asymmetric Smart Alpha S&P 500 Etf

JPMorgan US Tech Leaders ETF

The first week of October saw a flood of new ETFs, with 28 funds debuting on U.S. exchanges. Part of that was due to the first Ethereum futures ETFs being approved to launch on Monday.

This Week in ETFs: October Launches Start Strong

With a more than 40-year heritage of value investing, Brandes made its debut in the ETF market today. The firm launched three actively managed equity ETFs, leveraging a partnership with Goldman Sachs ETF Accelerator.

Brandes Joins the Active Equity ETF Market

News for Brandes International ETF ETF (BINV)