Donoghue Forlines Yld Enhd Rl Ast ETF retains its Morningstar Medalist Rating of Gold. The portfolio maintains a cost advantage over competitors, priced within the second-lowest fee quintile among peers.  

 The strategy's investment process inspires confidence and earns a High Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an overweight in liquidity exposure and quality exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And a high quality exposure is rooted in holding stocks with low financial leverage and strong returns on equity. The team managing this passive strategy earns a Below Average People Pillar rating. The strategy's parent organization is industry standard, albeit with some strong attributes like a high lineup success ratio, but is held back by below-average portfolio manager retention. This earns the firm an Average Parent Pillar rating.

Analyst Rating

Exxon Mobil

Southern Copper

Chevron

Caterpillar

Illinois Tool Works

Cummins

Kinder Morgan

Ferguson PLC

Williams

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. Donoghue Forlines Yld Enhd Rl Ast ETF earns a High Process Pillar rating. 

The main contributor to 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. This fund tracks an index, which also increases its process rating. Historical data, such as Morningstar's Active/Passive Barometer, shows that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. The size of the portfolio management team reinforces the process as well. With four portfolio managers at the helm, the fund is reasonably well-resourced.

 This strategy tends to hold smaller, deeper value companies than its average peer in the Large Value Morningstar Category. Examining additional factor exposure, this strategy has held more highly liquid stocks 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 also has had a position favoring high-quality stocks in recent years, which could contribute to higher downside risk protection. High exposure to the quality factor means holding companies that are consistently profitable, growing, and have solid balance sheets. Compared with category peers, the strategy also had more exposure to the Quality factor in the most recent month. Additionally, the managers have consistently taken on more risk, demonstrated by higher volatility exposure than peers. Such exposure tends to pay off when markets are hot and to be costly when they are not. In this month, the strategy also had more exposure to the Volatility factor over 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 basic materials relative to the category average by 36.8 and 14.0 percentage points, respectively. The sectors with low exposure compared to category peers are financial services and healthcare, underweight the average by 19.8 and 14.7 percentage points of assets, respectively. The strategy owns 78 securities and its assets are more dispersed than the typical peer in the category. In the most recent disclosure, 21.2% of the strategy's assets were concentrated in the top 10 fund holdings, as opposed to the category average's 27.4%. And finally, in terms of portfolio turnover, looking at year-over-year movements, 90% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

High

Process

FCF Funds’s team receives a Below Average People Pillar rating. The team is strengthened by the size of its portfolio management team. With four portfolio managers at the helm, the fund is reasonably well-resourced. However, the rating is weakened by the managers' failure to consistently outperform peers at the funds they run, as measured by their combined three-year manager excess returns. The parent firm's five-year success ratio of 100% also detracts from the team. 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.

Below Average

People

FCF Funds's track record as a steward is mixed, leading to an Average Parent Pillar rating. Longevity at the firm has been impressive. Its five-year success ratio is 100%, meaning that 100% of the products have both survived and beaten their respective category median. A high success ratio indicates good performance and provides insight into a firm’s discipline around investment strategy and product development. FCF Funds has undergone a bout of turnover in the past five years, as seen in its lower-than-average portfolio manager retention. This is a concern, as long-term stability tends to support positive results. An average tenure of only three years among the longest-tenured managers at FCF Funds is concerning. In isolation, seasoned teams tend to have more experience to draw upon should they need to weather turbulent market conditions.

Average

Parent

Donoghue Forlines Yield Enhanced Real Asset ETF

DFRA tracks an index that seeks to provide exposure to US real assets companies of all sizes with strong free cash flow, earnings, and dividend yield.

The Donoghue Forlines Yield Enhanced Real Asset ETF invests based on the FCF Yield Enhanced Real Asset Index. This article reviews both the ETF and its index, plus it compares DFRA data with competing funds.

DFRA: A New Real Asset ETF Off To Good Start

While inflation in the U.S. has come down considerably from its peak of 9.1% in June, consumer prices were still 6% higher at the end of February than they were a year ago. That's still significantly up from the 2% the Federal Reserve would like inflation to be.

Hedge Against High Inflation With Real Assets & DFRA

The housing market appears to be rebounding, as signed contracts to buy existing homes in the U.S. rose for the second consecutive month in January. The National Association of Realtors' index of pending home sales improved 8.1% to 82.5% in January.

Invest in Real Assets With DFRA While the Housing Market Rebounds

While mortgage rates are double what they were a year ago, home prices have been falling since June, slightly boosting consumer confidence in the housing market. Fannie Mae's Home Purchase Sentiment Index increased 3.7 points in December, slightly above its all-time low set in October.

Consider DFRA as Confidence in Housing Market Rises

With the S&P 500 down roughly 16% year-to-date and high inflation persisting, more investors are turning to real assets to generate returns for their portfolios.

Turn to Real Assets While Inflation Persists

Not many young ETFs can claim to be top dog in their area, but the Donoghue Forlines Yield Enhanced Real Asset ETF (DFRA) has done just that, using free cash flow analysis to outperform all other ETFs in all cap equities category YTD.

How Free Cash Flow Analysis Helped DFRA Outperform

Inflation has risen to record heights, with little to no indication that this spike in prices is temporary. But enduring inflation could create a favorable environment for real assets.

Defend Against Inflation With Real Assets

Investors are currently challenged with the threat of persistent inflationary pressure. Additionally, traditional asset classes are not cheap.

News for Donoghue Forlines Yield Enhanced Real Asset ETF ETF (DFRA)