Weakness in Beacon Selective Risk ETF's People and Process Pillar ratings limits this strategy to a Morningstar Medalist Rating of Negative. The portfolio maintains a cost advantage over competitors, priced within the second-lowest fee quintile among peers.  

 The team managing the strategy earns a Low People Pillar. The strategy earns a Low Process Pillar rating.  The strategy's parent organization still has a way to go to reach the industry standard, evidenced by unsubstantial personal investments from portfolio managers and a bench of limited-tenure portfolio managers. As a result, the firm obtains a Below Average Parent Pillar rating.

Analyst Rating

Vanguard Telecommunication Services ETF

Vanguard Information Technology ETF

Vanguard Energy ETF

Vanguard Industrials ETF

Vanguard Financials ETF

Vanguard Materials ETF

Vanguard Consumer Discretionary ETF

Vanguard Consumer Staples ETF

Vanguard Health Care ETF

Vanguard Real Estate ETF

Morningstar's evaluation of this fund's process aims to determine how repeatable, consistent, and reliable it is, and whether management maintains a competitive advantage. Beacon Selective Risk ETF earns a Low Process Pillar rating. The primary detractor from the rating is the parent firm's five-year retention rate of 67%, which suggests it could do more to retain its portfolio managers. Management team experience, which averages eight years at this fund, also detracts from the process. Lastly, being an actively managed strategy detracts from the process. Historical data, like Morningstar's Active/Passive Barometer, shows that actively managed funds have generally underperformed their passive counterparts, especially over longer time horizons.

 Its equity sleeve is consistently tilted toward both smaller market-cap and value-oriented companies as opposed to 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 maintains an overweight bias toward developed markets regions. Finally, the portfolio has consistently invested more in the communication services sector. 

 The portfolio is overweight in real estate and basic materials relative to the category average by 7.2 and 6.0 percentage points, respectively. The sectors with low exposure compared to category peers are technology and consumer defensive, underweight the average by 13.0 and 5.7 percentage points of assets, respectively. The portfolio is overweight in North America by 17.1 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, underweight the average by 6.9 percentage points and 2.7 percentage points, respectively.

 In the fund’s bond sleeve, interest rate risk is relatively high compared with the typical category peer, though credit risk is lower. More concretely, the portfolio exhibits a higher average credit rating of AA in contrast to the category average’s BB but has a longer average duration of 11.6 years versus the average of 4.6 years.

Process

Beacon Selective Risk ETF earns a Low People Pillar rating. The largest detractor from the rating is the managers' failure to consistently outperform peers at the funds they run, as measured by their combined three-year manager excess returns. 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. The parent firm's five-year retention rate of 67% hinders the team further.

People

Beacon Capital fails to meet industry-standard stewardship qualities, culminating in a Below Average Parent Pillar rating. Portfolio managers at Beacon Capital tend not to invest alongside their shareholders, detracting from the overall stewardship assessment. None of the firm’s assets are covered by an invested manager. With an average tenure of seven years among the longest-tenured managers at Beacon Capital, 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. Beacon Capital stands out in its commitment to investor values by offering its open-end and exchange-traded product lineup at a minimal cost. On average, fund fees at the firm are in the lowest quintile compared with category peers.

Below Average

Parent

Beacon Selective Risk ETF

BSR is an active fund-of-funds, specifically from Vanguard, seeking capital appreciation by investing in US equities while attempting to minimize losses in volatile markets. The fund utilizes a potential risk mitigation strategy to exit specific sectors into fixed-income securities.

Beacon Tactical Risk ETF

Beacon Capital Management has launched two complementary exchange traded funds on the New York Stock Exchange Arca: the Beacon Tactical Risk (NYSE Arca: BTR) and the Beacon Selective Risk (NYSE Arca: BSR).

Beacon Capital Management Launches Tactical and Selective Risk ETFs

DAYTON, Ohio, April 14, 2023 /PRNewswire/ -- Beacon Capital Management (www.BeaconInvesting.com), a registered investment adviser (RIA) firm that seeks to offer long-term investors innovative portfolio management solutions, announces the launch of its new exchange-traded fund (ETF), Beacon Tactical Risk (BTR), trading on the New York Stock Exchange Arca. With the launch of this ETF, Beacon Capital Management makes its popular investment philosophy accessible to a broad market of investors, working to capture gains while limiting losses in order to deliver consistent returns in today's volatile market conditions. The first day of trading is set for April 18, 2023.

News for Beacon Selective Risk ETF ETF (BSR)