Despite People Pillar weakness and an Average Process Pillar, ProShares Big Data Refiners 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 receives an Average Process Pillar rating. 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 organization doesn't stand out, earning the firm an Average Parent Pillar rating. It has displayed a handful of investor-friendly attributes including overall attractive fees and a favorable lineup success ratio.

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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. ProShares Big Data Refiners ETF earns an Average Process Pillar rating. The leading factor in 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. Management team experience, which averages 17 years at this fund, also strengthens the process. 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 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 results, before fees and expenses, that track the performance of the FactSet Big Data Refiners Index (the “index”).  The fund invests in financial instruments that ProShare Advisors believes, in combination, and should track the performance of the index. The index consists of companies that provide analytics and infrastructure for managing and extracting information from large data sets. The fund will invest in all of the component securities of the index in approximately the same proportion as the index. The fund is non-diversified. 

 The portfolio is overweight in technology by 20.0 percentage points in terms of assets compared with the category average, and its basic materials allocation is similar to the category. The sectors with low exposure compared to category peers are communication services and consumer cyclical, underweight the average by 8.3 and 4.4 percentage points of assets, respectively. The strategy owns 37 securities and invests 52.0% of assets in its top 10 holdings, similar to the category average. And in closing, in terms of portfolio turnover, on a year-over-year basis, 33% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Average

Process

ProShares’s team receives a Below Average People Pillar rating. The team is strengthened by the fund's structure. It tracks an index, which is helpful because historical data, such as Morningstar's Active/Passive Barometer, shows that index funds have generally outperformed their active counterparts, especially over longer time periods. 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 outperformed their respective category's median return for the period. The parent's modest success ratio suggests that the firm could do better across its fund lineup. The parent firm's five-year retention rate of 58% also limits the team.

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 Big Data Refiners ETF

DAT tracks a market-cap-weighted index of global companies focusing on the management, storage, usage, and analysis of large structured and unstructured datasets.

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