Despite People Pillar weakness and an Average Process Pillar, ProShares S&P Kensho Cleantech ETF gets enough right to retain its Morningstar Medalist Rating of Bronze. The portfolio maintains a cost advantage over competitors, priced within the second-cheapest 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 liquidity exposure and an underweight in quality exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And a low quality exposure is rooted in stocks with higher financial leverage and lower profitability. The team managing this passive strategy earns a Below Average People Pillar rating. The strategy's parent firm has some investor-friendly attributes, like overall low fees and a favorable lineup success ratio. As a result, the firm gets an Average Parent Pillar rating.

Analyst Rating

Cummins

Generac Holdings

First Solar

Nextracker Inc - Ordinary Shares - Class A

Enphase Energy

Arcosa Inc

Hyster-Yale Materials Handling

Ormat Technologies

Applied Materials

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. ProShares S&P Kensho Cleantech 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. A reasonable level of diversification across individual securities also supports the rating. The fund's top 10 holdings account for 39% of assets. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 38%. 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's relatively low 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 results, before fees and expenses, that track the performance of the S&P Kensho Cleantech Index (the “index”).  The fund invests in financial instruments that ProShare Advisors believes, in combination, should track the performance of the index. The index selects companies focused on building the technologies or products that enable the generation of clean energy, such as solar, wind, geothermal, hydrogen, and and hydroelectric. The fund will invest in all of the component securities of the index in approximately the same proportion as the index. It is non-diversified. 

 The portfolio is overweight in industrials and utilities relative to the category average by 43.7 and 3.3 percentage points, respectively. The sectors with low exposure compared to category peers are technology and communication services, underweight the average by 31.7 and 9.4 percentage points of assets, respectively. The strategy owns 33 securities and is diversified among those holdings. In its most recent portfolio, 39.1% of the fund’s assets were concentrated in the top 10 fund holdings, compared to the category average's 52.3%. And in closing, in terms of portfolio turnover, looking at year-over-year movements, 39% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Average

Process

ProShares’s team receives a Below Average People Pillar rating. The team is supported by the fund's structure. It tracks an index, which is helpful because historical data, such as Morningstar's Active/Passive Barometer, reveals that index funds have generally outperformed their active counterparts, especially over the long term. However, the rating is held back by the parent firm's five-year success ratio of 32%. 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 58% also holds the rating back.

Below Average

People

In a competitive industry, ProShares doesn't differentiate itself enough, leading to an Average Parent Pillar rating. One notable advantage of ProShares is its below-average fees. On average, the firm's open-end and exchange-traded fund fees fall in the second-cheapest quintile of category peers. The firm’s lineup has demonstrated industry-average durability. Its 10-year success ratio is 57%, meaning that 57% of strategies have both survived and beaten their respective category median. A firm's success ratio indicates relative performance and provides insight into a firm’s discipline around investment strategy and product development. ProShares has faced above-average manager turnover in the past five years. This is a concern, as long-term stability tends to support positive results.

Parent

Proshares S&P Kensho Cleantech ETF

CTEX tracks an index of US-listed companies involved in the development of technologies that enable clean energy generation. Holdings are equally-weighted within tiers.

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