The combination of an Average People Pillar rating and a Low Process Pillar rating limit  VictoryShares US 500 Enh Vol Wtd ETF 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 strategy gets a Low Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in liquidity exposure and an underweight in quality exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And a low quality exposure is rooted in stocks with higher financial leverage and lower profitability. The strategy’s management team earns an Average People Pillar rating. The strategy's parent organization earns the firm an 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

Berkshire Hathaway Inc. - Ordinary Shares - Class B

Republic Services

Loews

Coca-Cola

T-Mobile US

Colgate-Palmolive

Visa

Kimberly-Clark

Procter & Gamble

JPMorgan Chase & Co

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. VictoryShares US 500 Enh Vol Wtd ETF earns a Low Process Pillar rating. 

The primary detractor from the rating is 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. 

 This strategy skews toward smaller, more value-oriented companies compared with its average peer in the Large Blend Morningstar Category. Examining additional factor exposure, this strategy has held more highly liquid stocks 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 favored low-quality stocks. This means the fund avoids holding companies that are consistently profitable, growing, and have solid balance sheets. Lacking this ballast, the fund's prospects could rest on its ability to surpass peers during economic booms. Similarly, in recent months, the strategy also had less exposure to the Quality factor than peers. 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. This orientation tends to pay off most prominently when markets are hot. 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 industrials and utilities relative to the category average by 7.5 and 4.8 percentage points, respectively. The sectors with low exposure compared to category peers are technology and communication services, underweight the average by 13.1 and 5.0 percentage points of assets, respectively. The strategy owns 506 securities and its assets are more dispersed than peers in the category. In particular, 3.6% of the strategy's assets are concentrated in the top 10 fund holdings, compared to the category’s 48.8% average. And in closing, in terms of portfolio turnover, on a year-over-year basis, 271% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Process

Victory Capital’s team is good but unexceptional, earning the strategy an Average People Pillar rating. The fund takes a solo manager approach, with Mannik Dhillon as the only listed manager at the helm, who brings 10 years of portfolio management experience to the table. They manage a total of 17 strategies, with a Neutral asset-weighted average Morningstar Medalist Rating, indicating they will struggle to deliver positive alpha relative to the category median in aggregate. With only one manager listed on the strategy, the passive strategy is vulnerable to key-person risk. 

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

Average

People

As Victory Capital Management expands a roster of investment teams that runs the gamut,  it retains an Average Parent rating.

Victory operates a multiaffiliate model. It centralizes operations, compliance, and distribution while giving its 12 franchises investment autonomy. The franchise lineup had long been composed of those primarily focused on small/mid-cap equities. But the 2019 acquisition of fixed-income shop USAA Investments (which was rebranded as Victory Income Investors in April 2023) represented a significant change to that model. The firm has continued to broaden from there, acquiring three new franchises since the start of 2021: THB Asset Management (an environmental, social, and governance specialist), New Energy Capital (an alternatives manager), and WestEnd Advisors (a third-party model strategist). Overall, Victory is as big and diverse as ever: Its assets under management as of March 2023 was $157.6 billion, much higher than the $52.8 billion level as of December 2018.

Victory’s bright spots include Sycamore Capital and Trivalent Investments, which boast strong investment cultures, good levels of manager ownership, and solid capacity management processes. But there are questions elsewhere. Victory Capital Solutions has made some questionable subadvisor changes and dubious exchange-traded fund launches in recent years; Victory Income Investors has seen several departures since the 2019 acquisition and will absorb another franchise, Incore, in September 2023.

Parent

VictoryShares US 500 Enhanced Volatility Wtd ETF

CFO tracks an index of the largest US stocks by market cap, screened for positive earnings and weighted by volatility. The fund can move to 75% cash maximum in market downturns.

Within one week, Omicron has become the most prevalent variant in the U.S., overshadowing Delta in areas where both strains are actively spreading. It's an increase that even the CDC and health officials didn't expect, and with much still unknown about the health impacts of this newest COVID variant, it could have bigger economic impacts [.

Is Your Portfolio Ready for Omicron Impacts?

November jobs reports and unemployment figures reflect an economy not just recovering but growing. Private payroll numbers came in higher than anticipated, and adjusted unemployment numbers were at their lowest since 1969, reports CNBC.

Large Companies Drive Growth in November

Expectations of slowing global growth, delta fears, and U.S. monetary policy tightening have led to hesitant markets and increased volatility. Investors remain less-than-confident about economic recovery and growth, as outlined by the Financial Times.

‘CFO' Ameliorates Concerns over a ‘Wobbly' Market

Low volatility is still a favored investment factor, but some of the exchange traded funds addressing it can leave investors thirsting for more. Enter the VictoryShares US 500 Enhanced Volatility Wtd ETF (CFO).

Call on VictoryShare's CFO for Improved Low Volatility

In quiet fashion, the VictoryShares US 500 Enhanced Volatility Wtd ETF (CFO) is one of the stars among smart beta exchange traded funds this year. Off its March lows, CFO is higher by 28% and has recently been on a streak of hitting all-time highs.

Enhanced Volatility ETF Can Enhance Portfolios

VictoryShares US EQ Income Enhanced Volatility Wtd ETF

VictoryShares US 500 Volatility Wtd ETF

Investors who are concerned about concentration risks associated with the traditional market capitalization-weighted indexing approach may consider alternative index strategies, such as volatility-weighted smart beta exchange traded funds that help limit potential drawdowns.

News for VictoryShares US 500 Enhanced Volatility Wtd ETF ETF (CFO)