Counterpoint Quantitative Equity ETF’s Process Pillar rating is Average, but a strong management team still helps this strategy retain its Morningstar Medalist Rating of Bronze. The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.  

 The strategy's strong management team drives the fund's High People Pillar rating. The team, however, could invest more of their own money alongside shareholders. The strategy earns an Average Process Pillar rating.  High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And momentum exposure is rooted in holding stocks currently on a winning streak. The strategy's parent firm has some investor-friendly attributes, like a strong risk-adjusted track record, but it is held back by portfolio managers with modest tenures. As a result, the firm gets an Average Parent Pillar rating.

Analyst Rating

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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. Counterpoint Quantitative Equity ETF earns an Average Process Pillar rating. 

The main driver of the rating is the parent firm's five-year risk-adjusted success ratio of 69%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. The parent firm's impressive risk-adjusted performance, as shown by its average overall Morningstar Rating of 4.1 stars, also influences the rating. Lastly, the process is limited by the parent firm's five-year retention rate of 67%, which suggests it could do more to retain its portfolio managers.

 This strategy skews toward smaller, more value-oriented companies than its average peer in the Large Blend Morningstar Category. Examining additional factor exposure, the fund has held stocks with higher trading volumes compared to Morningstar Category Peers in the past few years. More-liquid assets are easier to buy and sell without adversely moving their prices and tend to provide some ballast during market selloffs. They also are easier to sell to meet redemptions if a host of investors decide to leave the fund in a short period of time. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. This strategy has also demonstrated more exposure to high-momentum stocks over peers in recent years. Momentum strategies wager that market outperformers will continue to outperform, and laggards will continue to lag. Higher exposure to the former could mean the managers are overweighting stocks on winning streaks. Compared with category peers, the strategy also had more exposure to the Momentum factor in the most recent month. This strategy also has tilted toward low-quality stocks, companies with higher financial leverage and lower profitability over these years. Such positions do not tend to provide much ballast for a portfolio. In recent months, the strategy also had less Quality 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 energy and healthcare relative to the category average by 14.2 and 5.1 percentage points, respectively. The sectors with low exposure compared to category peers are technology and financial services, underweight the average by 12.3 and 7.5 percentage points of assets, respectively. The strategy owns 51 securities and its assets are more dispersed than peers in the category. In particular, 20.3% of the portfolio's assets are concentrated in the top 10 fund holdings, as opposed to the category’s 49.5% average.

Average

Process

Counterpoint Quantitative Equity ETF earns a High People Pillar rating. The main contributor to the rating is its parent firm's five-year success ratio of 69%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median return for the period. The combined average five-year excess return of each manager also influences the rating. It shows that the funds they manage have surpassed the average manager. 


Michael Krause, the longest-tenured manager on the strategy, boasts 10 years of listed portfolio management experience. The average Morningstar Rating of the strategies they manage is 4.3 stars, demonstrating excellent risk-adjusted performance compared to category peers. The team is small but adequately equipped, with only one other supporting manager. Together, the two listed managers have nine years of average listed portfolio management experience. None of the managers here invest any money in the strategy, which is disappointing, as such investments help align managers' interests with fundholders.

High

People

Counterpoint Funds's track record as a steward is mixed, leading to an Average Parent Pillar rating. With an average five-year Morningstar Rating of 3.9 stars across its open-end and exchange-traded products, the firm has demonstrated its ability to deploy capital successfully for investors. With an average tenure of six years among the longest-tenured managers at Counterpoint Funds, 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. Lofty fees for the firm's open-end and exchange-traded funds are a weakness, contributing negatively to Counterpoint Funds's rating and creating a larger performance hurdle. The firm's fund fees, on average, fall within the second most-expensive quintile of similarly distributed strategies.

Parent

Counterpoint Quantitative Equity ETF

CPAI is actively managed, seeking long-term capital appreciation through a quantitative, model-based approach to select US stocks of any market capitalization.

SAN DIEGO--(BUSINESS WIRE)--Counterpoint Funds, a quantitative mutual fund and ETF provider specializing in systematic diversifier strategies, today announced the launch of the Counterpoint Quantitative Equity ETF. CPAI seeks long-term capital appreciation by investing in individual stocks that have exposure to multiple factors and are among the highest-ranking stocks to hold as determined by quantitative models and artificial intelligence.

News for Counterpoint Quantitative Equity ETF ETF (CPAI)