Weakness in Cabana Target Leading Sector Mod 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 second-cheapest fee quintile among peers.  

 The strategy's management team is about as experienced as others, but due to other weaknesses, the strategy earns a Low People Pillar. The strategy earns a Below Average Process Pillar rating.  The strategy's parent organization is industry standard, albeit with some strong attributes like overall reasonable fees, but is held back by an unfavorable average Morningstar Rating. This earns the firm an Average Parent Pillar rating.

Analyst Rating

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Morningstar's style-agnostic evaluation of this fund's process seeks to understand whether the strategy has a performance objective and sensible, clearly defined, repeatable execution. Cabana Target Leading Sector Mod ETF earns a Below Average Process Pillar rating. The process is strengthened by the firm's five-year retention rate of 88% over the period. However, the rating is limited by the experience of the management team, which averages six years at this fund. The fund's relatively concentrated portfolio detracts from the process, with its top 10 holdings accounting for 100% of assets. Concentration can lead to outperformance, but it amplifies the risk of a blowup.

This strategy maintains a fixed-income weighting similar to Moderate Allocation peers, but holds more assets in equities, with a 34% to 63% fixed-income to equity composition. Its equity holdings are not meaningfully different than the typical peer's size and value-growth exposure. 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 underweight bias to the consumer cyclical sector. And finally, in the fund's most recent portfolio, more assets were allocated to developed markets regions. Although, this bias has not existed over time. 

 The portfolio is overweight in industrials and real estate relative to the category average by 14.5 and 14.1 percentage points, respectively. The sectors with low exposure compared to category peers are financial services and healthcare, underweight the average by 11.7 and 10.6 percentage points of assets, respectively. The portfolio is overweight in North America by 14.5 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 United Kingdom, with Developed Europe underweight the average by 6.1 percentage points and United Kingdom similar to the average.

 For the strategy's fixed-income sleeve, credit risk exposure is higher compared with category peers. However, interest rate risk has been relatively lower. More explicitly, the strategy has an average credit rating of BB versus the category midpoint of BBB but possesses a shorter average duration of 4.2 years as opposed to the category midpoint's 5.1 years.

Below Average

Process

Cabana Target Leading Sector Mod ETF earns a Low People Pillar rating. The number one detractor from the rating is the experience of the management team, which averages six years at this fund. The instability of talent across its parent firm also limits the team. The firm's asset-weighted manager tenure of four years suggests it could do more to hold onto portfolio managers. The managers' failure to consistently outperform peers at the funds they run, as measured by their combined three-year manager excess returns, weakens the rating further.


None of the managers here invest any money in the strategy, which is disappointing, as such investments help align managers' interests with fundholders.

People

Cabana's track record as a steward is mixed, leading to an Average Parent Pillar rating. A strength of Cabana is that its product shelf of open-end and exchange-traded funds is, on average, offered at a minimal cost, suggesting that it considers what's best for its investor base. On average, fees for funds are in the second-lowest quintile of respective category peers. The firm's risk-adjusted performance is poor. Across all open-end and exchange-traded products, the firm’s average three-year Morningstar Rating is 2.0 stars. The firm has not had a durable product lineup. Specifically, its three-year success ratio demonstrates that only 0% of products were both able to survive and beat their respective category median. A low success ratio indicates poor performance and raises questions about a firm’s discipline around investment strategy and product development.

Average

Parent

Cabana Target Leading Sector Moderate ETF

CLSM seeks long-term growth by allocating to a mix of broad asset class ETFs in response to economic conditions. The fund uses an algorithm to select investments in sectors that it identifies as attractive pursuant to its moderate risk profile.

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FAYETTEVILLE, Ark.--( BUSINESS WIRE )--Cabana Asset Management (“Cabana”), a wholly owned subsidiary of The Cabana Group, LLC and an SEC registered investment adviser providing risk-managed investment portfolios to registered investment advisors (“RIAs”) and individual investors, today announced plans to transfer its two suites of Exchange Traded Funds (“ETFs”) from NYSE to Nasdaq on or about December 12, 2022. The last day of trading on NYSE will be December 9, 2022. Investors in the funds should not expect to see any impact on their trading experience as a result of the transfer.

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On Tuesday, Cabana Asset Management, a wholly-owned subsidiary of The Cabana Group, LLC and an SEC-registered investment adviser providing risk-managed investment products to investors, advisors, and institutions, announced the expansion of its ETF lineup with the launch of the Cabana Target Leading Sector ETFs, CLSC, CLSM, and CLSA, in partnership with private label ETF advisor Exchange [...] The post Cabana Asset Management Launches New Suite of Target Leading Sector ETFs appeared first on ETF Trends.

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