A strong management team and sound investment process underpin Congress SMid Growth ETF's Morningstar Medalist Rating of Gold. The portfolio maintains a sizable cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The management team's considerable industry experience drives a High People Pillar rating for the strategy. The strategy's investment approach stands out and earns an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a considerable overweight position in quality exposure and has an overweight in liquidity exposure compared with category peers. A high quality exposure means holding stocks that are consistently profitable, growing, and have solid balance sheets. And a high liquidity exposure is rooted in stocks with higher trading volumes, lending managers more flexibility. The strategy has a solid parent that earns an Above Average Parent Pillar rating. This firm has had a high lineup success ratio and overall affordable fees.

Analyst Rating

Comfort Systems USA

Williams-Sonoma

Medpace Holdings

SPS Commerce

e.l.f. Beauty

UFP Technologies

CyberArk Software

Entegris

Tractor Supply

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. Congress SMID Growth ETF earns an Above Average Process Pillar rating. 

The leading factor in the rating is the parent firm's five-year risk-adjusted success ratio of 100%. 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 firm's five-year retention rate of 83% also contributes to the process. Lastly, the process is limited by being an actively managed strategy. Historical data, like Morningstar's Active/Passive Barometer, finds that actively managed funds have generally underperformed their passive counterparts, especially over longer time horizons.

 This strategy prefers smaller market-cap firms compared with the average fund in its peer group, the Mid-Cap Growth Morningstar Category.  But in terms of style (value/growth) exposure, it is similar. Analyzing additional factors, this strategy has consistently favored high-quality stocks, including those with low financial leverage and solid returns on equity, compared with Morningstar Category peers during recent years. This means the fund holds consistently profitable, growing companies with solid balance sheets that may help it endure downturns better than Morningstar Category peers. In recent months, the strategy was more exposed to the Quality factor compared with its Morningstar Category peers as well. This strategy has also been exposed to liquid stocks during these years. Such stocks may have less potential upside than illiquid holdings, but they are easier to trade during market downturns. Compared with category peers, the strategy also had more exposure to the Liquidity factor in the most recent month. Additionally, the strategy has demonstrated a contrarian approach with relatively low exposure to momentum stocks during these years. Momentum investors tend to expect stocks that have done well recently to continue to do so in the short term. Momentum approaches can entail higher turnover and trading costs since the top stocks can often change. In recent months, the strategy also had less Momentum 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 consumer defensive and healthcare relative to the category average by 5.1 and 3.9 percentage points, respectively. The sectors with low exposure compared to category peers are financial services and communication services, underweight the average by 6.2 and 3.6 percentage points of assets, respectively. The portfolio is composed of 44 holdings and is relatively concentrated. In particular, 35.6% of the fund’s assets are housed within the top 10 holdings, compared with the typical peer's 25.9%. And in closing, in terms of portfolio turnover, looking at year-over-year movements, 1% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Above Average

Process

Congress SMID Growth ETF earns a High People Pillar rating. The largest contributor to the rating is its parent firm's five-year success ratio of 100%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median return for the period. The portfolio managers' outperformance at the funds they run, as measured by their combined three-year manager excess returns, also supports the rating. Low costs, with fees that rank in its category's least costly fifth, support the rating as well. Fees detract from net returns, so the managers have a lower expense hurdle to overcome.


Daniel A. Lagan’s veteran status, with over 25 years of listed portfolio management experience, brings a wealth of experience to the table. The average Morningstar Rating of the strategies they currently manage is 4.0 stars, demonstrating impressive risk-adjusted performance. Despite having a small team, the two listed managers boast over 30 years of 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

Congress earns an Above Average Parent Pillar rating because of its ability to stand out in an increasingly competitive field. The longevity of the firm's product lineup has been impressive, demonstrated by a five-year risk-adjusted success ratio of 100%. This means 100% of products have both survived and beaten their respective category median on a risk-adjusted basis. A high success ratio indicates good performance and provides insight into a firm’s discipline around investment strategy and product development. The firm stands out from a cost perspective for its open-end and exchange-traded funds, demonstrating a firm-wide commitment to minimizing costs and maximizing investors' returns. On average, the firm's fees on its funds are in the second cheapest quintile of its category. Average tenure of seven years among the longest-tenured managers at Congress is on par with peer firms. In isolation, seasoned teams tend to have more experience to draw upon should they need to weather turbulent market conditions.

Parent

Congress Smid Growth Etf

CSMD is an actively managed fund that seeks long-term capital appreciation by investing in small- and mid-cap companies believed to be experiencing or will experience earnings growth.

Congress Large Cap Growth ETF

Congress Asset Management Company has launched two active equity growth ETFs on the New York Stock Exchange. The ETFs seek long-term capital appreciation by targeting stocks with the potential for above-average long-term earnings and/or cash flow growth.

News for Congress Smid Growth Etf ETF (CSMD)