BlackRock U.S. Equity Factor Rttn ETF's Average Process Pillar and People Pillar ratings result in a Morningstar Medalist Rating of Neutral. The portfolio maintains a sizable cost advantage over competitors, priced within the lowest 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 an overweight in liquidity exposure and volatility exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. The strategy retains its portfolio managers but still earns an Average People Pillar rating. The strategy's parent organization earns the firm an Above Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

Analyst Rating

Microsoft

Apple

NVIDIA

Amazon

Berkshire Hathaway Inc. - Ordinary Shares - Class B

Visa

JPMorgan Chase & Co

Alphabet

UnitedHealth Group

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. BlackRock U.S. Eq Fctr Rttn ETF earns an Average Process Pillar rating. 

The most important driver of the rating is the parent firm's five-year risk-adjusted success ratio of 59%. 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 firm's impressive risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 3.2 stars, also influences the rating. Lastly, the process is limited by the experience of the management team, which averages seven years at this fund.

 This strategy prefers smaller market-cap companies compared with the average fund in its peer group, the Large Blend Morningstar Category.  But in terms of style (value/growth) exposure, it is similar. Looking at additional factor exposure, the fund has held stocks with higher trading volumes compared to Morningstar Category Peers in the past few years. More-liquid assets contribute to more-flexible exit strategies without price changes and tend to be a ballast during market selloffs. For example, if the portfolio faces successive redemptions in a short period of time, it will be less likely to experience a significant loss. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. This strategy has also exhibited a tilt toward high-volatility stocks over these years, meaning it has invested in companies that have a higher historical standard deviation of returns. Such exposure tends to pay off when markets are hot and to be costly when they are not. Compared with category peers, the strategy also had more exposure to the Volatility factor in the most recent month. In addition, this strategy has taken on exposure to high-momentum stocks in these years. Momentum approaches bet that rising stocks will continue to rise and that lagging stocks will continue to lag. In this month, the strategy also had more exposure to the Momentum 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 technology and consumer cyclical relative to the category average by 11.0 and 9.3 percentage points, respectively. The sectors with low exposure compared to category peers are healthcare and consumer defensive, underweight the average by 13.3 and 6.1 percentage points of assets, respectively. The portfolio is positioned across 73 holdings and is less top-heavy than peers. Specifically, 46.0% of the fund’s assets are concentrated within the top 10 fund holdings, compared to the typical peer's 48.8%. And finally, in terms of portfolio turnover, looking at year-over-year movements, 118% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Average

Process

BlackRock U.S. Eq Fctr Rttn ETF earns an Average People Pillar rating. The main contributor to the rating is its parent firm's five-year success ratio of 60%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median return for the period. The stability of the management team also influences the rating. Specifically, the fund has not seen a manager change in the last three years. Lastly, the rating is limited by the combined average five-year excess return of each manager, which indicates that the funds they manage have trailed their respective category average.


Philip Hodges, the longest-tenured manager on the strategy, provides strong guidance, bringing forward 11 years of listed portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 4.0 stars, indicating that their risk-adjusted returns outperformed the category average. Philip Hodges draws on only one other listed manager. Together, they are adequately equipped with seven years of average listed portfolio management experience. None of the managers here invest any money in the strategy, which is disappointing, as such investments help align managers' interests with fundholders.

People

BlackRock offers compelling options across asset classes and vehicles. It earns an Above Average rating for Parent. 
The firm’s approximately USD 8 trillion in assets under management, as of Sept. 30, 2022, gives it unparalleled scale and influence. It is a market-leading index fund provider globally, and its iShares exchange-traded fund franchise offers a low-cost lineup of core funds that investors can use to build a well-diversified portfolio for dirt cheap. The firm can be more adventurous in its ETF launches than some peers, so not everything it launches is appropriate for the masses. As a result, it is likely to have more ETF closures than peers that stick to the basic building blocks.  
The firm’s active fixed-income and multi-asset efforts also stand out as some of the best in the industry. Those benefit from BlackRock’s commitment to building a first-class risk management system via its Aladdin analytics software. The software is also available for sale to other firms and has proved to be a popular option for competitors, a testament to its usefulness. 
More recently, the firm has shifted its focus to ESG offerings and incorporating ESG across its investment lineup, leading to a political backlash in the United States.
BlackRock isn’t the best at everything it tries to do, but retail investors, financial advisors, and large institutions could all build robust portfolios using BlackRock’s products.

Above Average

Parent

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