Strength in Arrow DWA Tactical Macro ETF's Process Pillar is partially offset by an Average People Pillar rating, leading to a Morningstar Medalist Rating of Neutral. Fees are a weakness here. The strategy's lofty fees are a high hurdle to clear, as it is priced within the second-costliest quintile among peers.  

 The strategy benefits from the longest-tenured manager on the team's lengthy experience. This is a positive driver of the strategy's Average People Pillar rating. The strategy's investment approach stands out and earns an Above Average Process Pillar rating.  To be considered a quality steward, this strategy's parent organization needs to improve factors like a bench of portfolio managers with limited tenure and discontinuity among portfolio managers. As a result, the firm obtains a Below Average Parent Pillar rating.

Analyst Rating

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Morningstar's style-agnostic investment process evaluation looks for strategies that should be able to outperform their Morningstar Category index on a risk-adjusted basis over time. Arrow DWA Tactical Macro ETF earns an Above Average Process Pillar rating. The firm's five-year retention rate of 67% supports the rating. The process is limited by the number of months that the management team has been running this vehicle together.

 Its equity sleeve has exhibited a continual bias to smaller market-cap companies versus category peers. Although in terms of style (value/growth) exposure, it is average. The strategy has three region or sector biases compared to category peers. The most noteworthy is a bias away from the communication services sector, where the portfolio has been consistently underweight. It also maintains an underweight bias to the United Kingdom region. Finally, the strategy has invested more in developed markets regions than peers. 

 The portfolio is overweight in consumer cyclical and industrials relative to the category average by 7.4 and 7.1 percentage points, respectively. The sectors with low exposure compared to category peers are healthcare and financial services, underweight the average by 5.1 and 3.8 percentage points of assets, respectively. The portfolio is overweight in Japan and Latin America regions relative to the category average by 6.7 percentage points and 6.3 percentage points, respectively. The regions with low exposure compared to their category peers are Developed Europe and United Kingdom, underweight the average by 7.0 percentage points and 2.6 percentage points, respectively.

Above Average

Process

Arrow DWA Tactical Macro ETF earns an Average People Pillar rating. The main contributor to the rating is the portfolio managers' outperformance of peers at the funds they run, as measured by their combined three-year manager excess returns. The rating is limited by the turnover of its management team. The fund last saw a manager change two months ago, which suggests that it could do more to retain its portfolio managers.


The team is backed by Jonathan S. Guyer, the longest-tenured manager on the strategy, who brings 18 years of listed portfolio management experience. The strategies they currently manage have an average Morningstar Rating of 2.7 stars, demonstrating disappointing risk-adjusted performance compared with category peers. Jonathan S. Guyer has an experienced listed co-manager. Together, they average 14 years of listed portfolio management experience.

Average

People

In an increasingly competitive industry, ArrowShares falls behind on a number of key metrics, resulting in a Below Average Parent Pillar rating. With an average tenure of seven years among the longest-tenured managers at ArrowShares, 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. ArrowShares management has lacked continuity over the past five years, denoted by higher-than-average portfolio manager turnover, which detracts from the firm's stewardship rating. 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.

Below Average

Parent

Arrow DWA Tactical: Macro ETF

DWAT is an actively-managed, multi-asset fund-of-funds that primarily aims for capital appreciation with capital preservation as its secondary objective.

iShares Core Growth Allocation ETF

SPDR SSgA Global Allocation ETF

The lines between strategic and tactical allocation often blur.

News for Arrow DWA Tactical: Macro ETF ETF (DWAT)