The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  Sprott Junior Copper Miners ETF to a Morningstar Medalist Rating of Neutral.  The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.  

 The team managing the passive strategy earns a Below Average People Pillar. The strategy earns an Average Process Pillar rating.  Low liquidity risk exposure is attributed to stocks with a low trading volume, limiting managers' flexibility. And a low quality exposure is rooted in stocks with higher financial leverage and lower profitability. The strategy's parent organization earns the firm an Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

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Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. Sprott Junior Copper Miners ETF earns an Average Process Pillar rating. The most substantial contributor to the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Low costs across its parent firm's funds, whose fees, on average, rank in the middle quintile of their respective category, also support the process. The pattern of low expenses at the firm suggests that it is focused on delivering strong results for investors. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 43%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's modest success ratio suggests that the firm could do better across its fund lineup.

The investment strategy as stated in the fund's prospectus is:  The investment seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Nasdaq Sprott Junior Copper Miners Index.  The fund will, under normal circumstances, invest at least 80% of its total assets in securities of the index. The index is designed to track the performance of companies that derive at least 50% of their revenue and/or assets from mining, exploration, development, and and production of copper. The index generally consists of from 25 to 45 constituents. The fund is non-diversified. 

 The portfolio is overweight in basic materials by 50.0 percentage points in terms of assets compared with the category average, and its financial services allocation is similar to the category. The sectors with low exposure compared to category peers are energy and industrials, underweight the average by 27.5 and 10.4 percentage points of assets, respectively. The portfolio is composed of 42 holdings and is relatively top-heavy. Of the strategy's assets, 56.1% are concentrated within the top 10 holdings, compared to the typical peer's 23.9%. And finally, in terms of portfolio turnover, on a year-over-year basis, 36% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Average

Process

Sprott’s team earns a Below Average People Pillar rating. The team benefits from the portfolio managers' outperformance of peers at the funds they run, as measured by their combined three-year manager excess returns. However, the rating is weakened by the parent firm's five-year success ratio of 30%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median return for the period. The parent's subpar success ratio suggests that the firm could do better across its fund lineup. The parent firm's five-year retention rate of 50% also holds the team back.

Below Average

People

Sprott's focus on a niche area of the market and some mixed characteristics lead to an Average Parent rating.
This firm has undergone several changes in the past five years. In 2017, the firm spun off the non-precious-metals vehicles it had launched over the prior decade, and founder Eric Sprott retired. Getting back to its roots, the firm has since consolidated one of Canada's gold exchange-traded funds into its own and acquired a gold ETF, a silver ETF, and a U.S.-based, actively managed open-end mutual fund focused on gold-mining stocks. Sprott has recently expanded its lineup to include critical minerals, namely a uranium ETF and a physical platinum and palladium trust, but the firm remains largely focused on precious metals.
A relatively deep investment team manages this niche lineup. In 2022, 25-year industry veteran John Ciampaglia took over as Sprott Asset Management's CEO from Whitney George after George became Sprott Inc.'s CEO. That said, George remains involved in investment management, and an experienced 12-person team remains, including John Hathaway and Doug Groh, who came aboard as part of the firm's 2020 acquisition of Tocqueville's gold strategies. These resources could give the firm an edge, but key-person risk remains given the long tenures of Hathaway and George. Further, the firm's niche focus creates potential for large swings in both assets and performance.

Parent

Sprott Junior Copper Miners ETF

COPJ seeks to track an index of small copper miners around the globe, primarily those with revenues tied to the mining, development and production of copper. Securities are selected using a fundamental, proprietary methodology and weighted by market cap.

Sprott Copper Miners ETF

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Only U.S.-Listed ETF That Provides Pure-Play Exposure to Large, Mid- and Small-Cap Copper Miners Copper Miners ETF Adds to Sprott's Expanding ETF Suite TORONTO, March 06, 2024 (GLOBE NEWSWIRE) -- Sprott Asset Management LP (“Sprott”) today announced the launch of the Sprott Copper Miners ETF (Nasdaq: COPP) (the “ETF” or “COPP”), the only1 U.S.-listed ETF to provide pure-play2 exposure to large, mid- and small-cap copper miners that supply a critical material necessary for the energy transition. The ETF is the most recent addition to Sprott's suite of critical materials-focused ETFs and is Sprott's second copper mining fund, joining the Sprott Junior Copper Miners ETF (COPJ), which launched in February 2023.

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