The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  IDX Dynamic Innovation ETF 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 team managing the strategy earns a Below Average People Pillar, following a downgrade from Average. The strategy gets an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in liquidity exposure and currently has an underweight in momentum exposure compared with category peers. Low liquidity risk exposure is attributed to stocks with a low trading volume, limiting managers' flexibility. And low momentum exposure is rooted in holding stocks that are not currently on a winning streak and instead holding those that managers believe are undervalued. 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 modest portfolio manager turnover but is held back by portfolio managers with limited tenures at the firm.

Analyst Rating

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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. IDX Dynamic Innovation ETF earns an Average Process Pillar rating. 

The predominant contributor to the rating is the firm's five-year retention rate of 100% over the period. Low costs across its parent firm's funds, whose fees, on average, rank in the middle quintile of their respective category, also influence the rating. The pattern of low fees at the firm suggests that it is focused on delivering strong results for investors. Lastly, the process is limited by the experience of the management team, which averages four months at this fund.

 This strategy skews toward smaller, more undervalued companies than its average peer in the Technology Morningstar Category. Examining additional factor exposure, this strategy continually held some stocks with low trading volume over the last few years. Less-liquid stocks might offer strong returns to compensate for their risks, but they can be harder and more expensive to trade in bear markets. In the latest month, the strategy was also less exposed to the Liquidity factor compared with Morningstar Category peers. The strategy also had similar exposure to high-momentum stocks compared with Morningstar Category peers in the most recent month.   Additionally, the strategy had more exposure to high-quality stocks compared with Morningstar Category peers in recent months. High exposure to the quality factor means holding companies that are consistently profitable, growing, and have solid balance sheets.  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 financial services and healthcare relative to the category average by 15.4 and 5.0 percentage points, respectively. The sectors with low exposure compared to category peers are technology and industrials, with technology underweighting the average portfolio by 19.3 percentage points of assets and industrials similar to the average. The strategy has only reported a handful of holdings, and is in a category where the typical fund has 52.4% of assets within the top 10 holdings.

Average

Process

IDX Dynamic Innovation ETF earns a Below Average People Pillar rating. The team is bolstered by the firm's five-year retention rate of 100%. However, the rating is limited by the experience of the management team, which averages four months at this fund. The number of months that the management team has been running this vehicle together also holds the rating back. Since this is a newly incepted product, more time is needed to monitor the team's capability at executing the strategy.

Below Average

People

IDX Insights is an industry-standard asset manager, leading to an Average Parent Pillar rating. Morningstar generates quantitatively driven content for managed investments covered by the Morningstar Quantitative Rating, collectively called MQR Analysis. This strategy's Parent Pillar MQR Analysis content was not generated because of insufficient data. To generate individualized content, MQR Analysis requires sufficient data to generate its framework of “mental models” designed to mimic content written by analysts. The Quantitative Parent Pillar uses an algorithm designed to predict the Parent Pillar rating analysts would assign the investment product if they covered it.

Parent

IDX Dynamic Innovation ETF

DYNI is an actively managed fund-of-funds that invests in technology equity ETFs with exposure to companies from around the world with addressable markets perceived to have potential for widespread adoption.

PHOENIX , Nov. 21, 2023 /PRNewswire/ -- IDX Shares, a leading provider of innovative exchange-traded funds (ETFs), is pleased to announce the launch of the IDX Shares Dynamic Innovation ETF (Ticker: DYNI), now available for trading on the Nasdaq Stock Market. DYNI is an active, rules-based ETF designed to provide investors with dynamic exposure to the ever-evolving "Technology and Innovation" space, offering a unique blend of growth exposure with the potential for enhanced risk management relative to long-only investments.

News for IDX Dynamic Innovation ETF ETF (DYNI)