The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  Brendan Wood TopGun ETF 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 strategy's management team is about as experienced as others, but due to other weaknesses, the strategy earns a Below Average People Pillar. The strategy earns an Average Process Pillar rating.  Momentum exposure is attributed to holding stocks currently on a winning streak and selling those that are on a downtrend. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. To be considered a quality steward, this strategy's parent organization needs to improve factors like minimal personal investments from portfolio managers and portfolio managers with limited tenures at the firm. As a result, the firm obtains a Below Average Parent Pillar rating.

Analyst Rating

NVIDIA

Progressive

CrowdStrike

TransDigm

Amazon

Alphabet

Costco

JPMorgan Chase & Co

Brookfield Corp

Waste Connections

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. Brendan Wood TopGun ETF earns an Average Process Pillar rating. 

The predominant contributor to the rating is the firm's five-year retention rate of 100% over the period. The fund's concentrated portfolio, with its top 10 holdings accounting for 45% of assets, contributes to the process. High-conviction picks court the risk of blowing up, but can also drive outperformance. Lastly, the process is limited by the experience of the management team, which averages five years at this fund.

 This strategy has tended to hold more growth stocks than others in the Large Blend Morningstar Category. But in terms of market capitalization, it is on par with peers. Looking at additional factor exposure, this strategy has consistently had exposure to high-momentum stocks compared with Morningstar Category peers over the past few 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. In recent months, the strategy was more exposed to the Momentum factor compared with its Morningstar Category peers as well. This strategy also has had an overweight bias to the volatility factor over these years, meaning it has owned companies that have a higher historical standard deviation of returns. Such exposure tends to pay off when markets are hot and to be costly when they are not. Compared with category peers, the strategy also had more exposure to the Volatility factor in the most recent month. Furthermore, this strategy has leaned toward low-yield stocks over recent years, holding fewer companies with high dividend or buyback yields. Its preference for stocks with lower yields may well lead to a growthier portfolio. However, growth stocks court additional risks if their forecasts do not come to fruition and are often more volatile than companies with stable dividends. 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 financial services by 14.1 percentage points in terms of assets compared with the category average, and its industrials allocation is similar to the category. The sectors with low exposure compared to category peers are energy and basic materials, underweight the average by 3.9 and 2.7 percentage points of assets, respectively. The portfolio is composed of 25 holdings and its assets are more dispersed than peers in the category. In particular, 45.0% of the fund’s assets are concentrated in the top 10 fund holdings, as opposed to the category’s 49.5% average.

Average

Process

Brendan Wood TopGun ETF earns a Below Average People Pillar rating. The team benefits from the firm's five-year retention rate of 100%. However, the rating is weakened by the number of months that the management team has been running this vehicle together. Since this is a newly incepted product, more time is needed to monitor the team's capability at executing the strategy. Management team experience, which averages five years at this fund, also detracts from the team.


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.

Below Average

People

Brendan Wood TopGun Partnerships is a relative newcomer with only four months of operation as a firm under its belt. It is too nascent to prove whether it has an edge over peer asset managers, earning it a Below Average Parent Pillar rating. The firm currently manages one vehicle, with a total of $4.7 million under management across a group of three portfolio managers.  The firm's earliest portfolio manager hire, Matthew Tuttle, has 15 years of industry experience. 
 
   

 As Brendan Wood TopGun Partnerships builds and continues to develop a track record, its rating will be adjusted accordingly.

Parent

Brendan Wood TopGun ETF

BWTG is actively managed to invest in a model portfolio of 25 large- and mid-cap US companies identified to have the highest quality ratings.

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