Weakness in ALPS Disruptive Technologies ETF's Process and People Pillar ratings limits this strategy to a Morningstar Medalist Rating of Negative. The portfolio maintains a sizable cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy gets a Low Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in quality exposure and an overweight in volatility exposure compared with category peers. Low quality exposure is attributed to stocks with higher financial leverage and lower profitability. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. The team managing this passive strategy earns a Below Average People Pillar rating. Although this strategy's parent firm still has a way to go to be a high-quality steward, it has bright spots like portfolio managers who invest a sizeable amount in their strategy but could focus on a relatively inexperienced portfolio management team. As a result, the firm earns a Low Parent Pillar.

Analyst Rating

Netflix

Boston Scientific

First Solar

DexCom

PayPal

Workday

Align Technology

ANSYS

ServiceNow

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. ALPS Disruptive Technologies ETF earns a Low Process Pillar rating. The main detractor from the rating is the fund's mediocre long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the process has struggled over that period. The parent firm's five-year retention rate of 62% also holds the process back. The parent firm's five-year risk-adjusted success ratio of 43% further holds the rating back. 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 subpar 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 investment results that correspond (before fees and expenses) generally to the performance of the Indxx Disruptive Technologies Index (the "underlying index").  The fund will invest at least 80% of its net assets in securities that comprise the underlying index. The underlying index is designed to identify the companies using disruptive technologies in each of ten thematic areas: Healthcare Innovation, Internet of Things, Clean Energy and Smart Grid, Cloud Computing, Data and Analytics, FinTech, Robotics and Artificial Intelligence, Cybersecurity, 3D Printing, and and Mobile Payments. 

 The portfolio is overweight in industrials and healthcare relative to the category average by 11.5 and 10.0 percentage points, respectively. The sectors with low exposure compared to category peers are technology and communication services, underweight the average by 17.1 and 8.1 percentage points of assets, respectively. The portfolio is positioned across 100 holdings and is less top-heavy than peers. Specifically, 12.9% of the strategy's assets are concentrated within the top 10 fund holdings, as opposed to the category average's 52.3%. And in closing, in terms of portfolio turnover, looking at year-over-year movements, 34% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Process

ALPS’s team earns a Below Average People Pillar rating. The team is strengthened by the combined average three-year excess return of each manager, which suggests that the funds they manage have beat an average manager. However, the rating is weakened by the parent firm's five-year success ratio of 42%. 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 62% also holds the rating back.

Below Average

People

ALPS has a ways to go to become an industry-standard steward, resulting in a Low Parent Pillar rating. Despite the negative rating, an area of strength of the firm is manager investment.  Over 34% of the firm's assets are covered by invested managers, in an effort to align portfolio manager and shareholder interests. With an average asset-weighted tenure of eight years among the longest-tenured managers at ALPS, the firm is on par with peers. Seasoned teams tend to have more experience to draw upon should they need to weather turbulent market conditions. The firm charges fees on its open-end and exchange-traded funds that are on par with category peers. On average, fund fees on its products fall in the middle quintile, giving it neither an advantage nor disadvantage compared with the competition.

Parent

ALPS Disruptive Technologies ETF

DTEC tracks an index of 100 global companies that are involved in disruptive technologies across 10 themes.

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SS&C ALPS Advisors' disruptive technologies ETF provides notably different exposure than a broad tech sector fund. The differences in composition between ALPS' fund versus the broad benchmark could be seen in last month's performance.

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SS&C ALPS Advisors' disruptive technologies ETF generated attractive returns for investors last month. The ALPS Disruptive Technologies ETF (DTEC) climbed 15.80% in November, outpacing the broad-based tech sector.

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The ALPS Disruptive Technologies ETF (DTEC) fell 4.76% last month, creating an attractive entry point for investors looking to add growthier names to their portfolios. DTEC trailed the Morningstar Global Markets Index (MSGMUSDN) last month as markets fell amid renewed uncertainty surrounding rising inflation and recession fears that continue to grip the markets.

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