VictoryShares US SmCp Hi Div Vol Wtd ETF's Average Process Pillar and People Pillar ratings result in a Morningstar Medalist Rating of Neutral. The portfolio maintains a sizable cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy gets an Average Process Pillar. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in yield exposure and an underweight in momentum exposure compared with category peers. High yield exposure is attributed to holding high dividend-paying or buyback stocks, and is suitable for income seekers outside of fixed-income. And low momentum exposure is rooted in holding stocks that are not currently on a winning streak and instead holding those that managers believe are undervalued. 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

MGE Energy

MDU Resources Group

Wendy's

MSC Industrial Direct

National Fuel Gas

New Jersey Resources

NorthWestern

Spire

American States Water

ALLETE

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 SmCp Hi Div Vol Wtd ETF earns an Average Process Pillar rating. 

The most important driver of 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. Excellent risk-adjusted performance also supports the process. This can be seen in the fund's five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 46%. 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.

 This strategy leans toward smaller, more value-oriented companies than its average peer in the Small Value Morningstar Category. Examining additional factor exposure, the managers have consistently overweighted yield-paying companies compared with Morningstar Category peers in recent years, shown by the portfolio's high exposure to stocks paying dividends or buying back shares. High-yield stocks tend to be associated with more mature, profitable businesses that can grow as well as provide a stream of income. Such stocks could suffer, however, if setbacks force them to cut their dividends. In recent months, the strategy was more exposed to the Yield factor compared with its Morningstar Category peers as well. This strategy has also demonstrated a bias towards lower-momentum stocks over its peers over the past years. Momentum strategies typically bet that stocks that have recently outperformed will continue to do so, and those that have recently underperformed will keep lagging. Avoiding the former and buying the latter could indicate that managers are averse to chasing momentum. Similarly, in recent months, the strategy also had less exposure to the Momentum factor than peers. In addition, this strategy has constantly held more illiquid stocks, evidenced by holdings' low trading volume, resulting in higher liquidity risk exposure than peers. Less-liquid stocks might offer strong returns to compensate for their risks, but they can be harder and more expensive to trade in bear markets. In recent months, the strategy also had less Liquidity 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 utilities and consumer cyclical relative to the category average by 13.2 and 7.0 percentage points, respectively. The sectors with low exposure compared to category peers are technology and industrials, underweight the average by 8.1 and 7.4 percentage points of assets, respectively. The portfolio is positioned across 102 holdings and is diversified among those holdings. In its most recent portfolio, 15.0% of the strategy's assets were concentrated in the top 10 fund holdings, compared to the category average's 28.1%. And finally, in terms of portfolio turnover, on a year-over-year basis, 82% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Average

Process

Victory Capital’s  team is comparable to peers, resulting in 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.

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 Small Cap High Div Volatility Wtd ETF

CSB tracks the performance of the Compass EMP US Small Cap High Dividend 100 Volatility Weighted Index by investing in small-cap dividend-paying US common stocks.

CSB's idea is to amalgamate high-yield dividend-paying U.S. small-cap stocks, placing more weight on those with stronger low-volatility characteristics. CSB has delivered some healthy returns since its inception, beating a few of its counterparts. But the fairly perplexing issue is that its value- and low-volatility-centered strategy was incapable of effectively minimizing losses during the 2022 bear market as it was down double digits.

CSB: Unconvincing Performance, Questionable Quality, And Dividend Growth Nuances

VettaFi's vice chairman Tom Lydon discussed the VictoryShares US Small Cap High Dividend Volatility Wtd ETF (CSB) on this week's “ETF of the Week” podcast with Chuck Jaffe of “Money Life.” For more news, information, and analysis, visit VettaFi | ETF Trends.

WATCH: ETF of the Week: VictoryShares US Small Cap High Dividend Volatility Wtd ETF (CSB)

CSB is a volatility-weighted small-cap ETF that yields 3.30%. Its long-term performance is solid compared to peers, but weak fundamentals led to disappointing returns last year. CSB overweights Consumer Discretionary stocks, an odd feature for a portfolio that's designed to lessen risk. It's one clue that CSB isn't the best way to play defense.

CSB: Impressive 3.30% Dividend Yield, But Still Unappealing

CAMBRIDGE, Mass.--( BUSINESS WIRE )-- Cambridge Savings Bank (CSB), a full-service mutual bank with a customer-first approach and $6 billion in assets, today announced that its Asset-Based Lending team provided an $8.8 million credit facility to Cascade School Supplies . Based in North Adams, MA, Cascade retails a wide range of educational materials to public schools in the Northeast, while also meeting the office supplies and furniture needs of various other organizations.

Cambridge Savings Bank Supports Cascade School Supplies with $8.8 Million Credit Facility to Support Growth and Infrastructure Improvements

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This article summarizes the performance of the entire U.S. equity market by examining 1Y, 3Y, 5Y, and 10Y returns for 850+ ETFs across 40 categories. Major indices declined, but investing in Energy, High-Dividend, and Large-Cap Value ETFs softened the blow. Meanwhile, searching for the bottom in mega-cap growth and thematic ETFs didn't work.

U.S. Equity ETFs: The Best And Worst Of 2022

Cambridge Savings Bank Provides Artist & Craftsman Supply with a $4 Million Revolving Line of Credit to Pursue Strategic Growth Initiatives

CSB is a $201 million fund focusing on generous dividend payers from the U.S. small-cap equity echelon, with attention paid to the volatility factor. As the small size in most cases is synonymous with lower multiples compared to sector medians, CSB has unsurprisingly substantial exposure to the value factor.

CSB: Mixed Performance, Worrisome Quality

CSB holds 100 low-volatile small-cap value stocks. I've estimated its yield to be 2.85% net of fees, and it's outperformed the Russell 2000 Value Index since its inception. Regional Banks make up the fund's largest exposure area, accounting for nearly 20% of the ETF. Usually, this industry is very volatile, but quality appears sacrificed for the lower risk.

CSB: Solid Historical Returns, 2.85% Estimated Yield, But A Risky Earnings Season Awaits

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Each month, I give a broad overview of dividend and income-focused ETFs, selecting them from my growing database of about 750 funds. I've added a seventh category to this monthly series: risk management ETFs, bringing the total number of funds analyzed to 88.

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VictoryShares US Small Cap Volatility Wtd ETF

CSB focuses on high yielders in the small-cap space and also attempts to tone down the overall volatility profile of the portfolio.

CSB: Deserves More Attention

While the dividend profile of small cap equities is evolving, the continued reality is that many investors don't associate smaller stocks with dividends. That stands to reason, as the widely followed Russell 2000 Index yields just 0.92% as of May 24.

The CSB ETF: Small Stocks with Big Dividends

Small cap equities are hot and dividend stocks are on the comeback trail. Investors can tap into both themes with the VictoryShares U.S. Small Cap High Dividend Volatility Weighted Index ETF (CSB).

Grab Small Caps. Reduce Volatility.

News for VictoryShares US Small Cap High Div Volatility Wtd ETF ETF (CSB)