Weakness in AdvisorShares Restaurant ETF's Process and People Pillar ratings limits this strategy to a Morningstar Medalist Rating of Negative. Fees are a weakness here. The strategy's lofty fees are a high hurdle to clear, as it is priced within the second-highest quintile among peers.  

 The strategy earns a Below Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in quality exposure and yield exposure compared with category peers. Low quality exposure is attributed to stocks with higher financial leverage and lower profitability. And a low yield exposure is rooted in holding fewer stocks with high dividend or buyback yields -- instead, typically holding stocks in an early stage of development. The portfolio management team managing the strategy earns a Below Average People Pillar rating. To be considered a quality steward, this strategy's parent organization needs to improve factors like a bench of relatively inexperienced portfolio managers and high portfolio manager turnover. As a result, the firm obtains a Low Parent Pillar rating.

Analyst Rating

Wingstop

Domino's Pizza

Chipotle

Brinker International

Arcos Dorados Hlds

Cava Group Inc

Dine Brands Global

YUM! Brands

Portillo's

Restaurant Brands

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. AdvisorShares Restaurant ETF earns a Below Average Process Pillar rating. 

The process is bolstered by the experience of the management team, which averages 22 years at this fund. However, the rating is held back by the parent firm's five-year retention rate of 15%, which suggests it could do more to hold onto its portfolio managers. The parent firm's five-year risk-adjusted success ratio of 50% also limits the process. 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.

 This strategy skews toward smaller, more value-oriented companies compared with its average peer in the Consumer Cyclical Morningstar Category. Analyzing additional factors, this strategy tilts consistently toward stocks with lower quality or the shares of companies with more financial leverage and lower profitability, compared with Morningstar Category peers over the past few years. Such positions do not tend to provide much ballast for a portfolio. In the latest month, the strategy was also less exposed to the Quality factor compared with Morningstar Category peers. This strategy also has had lower yield exposure than peers over these years; its portfolio has held fewer stocks with high dividend or buyback yields. This is demonstrated by the portfolio's low exposure to dividends or buybacks. While companies with high yields provide consistent income payments, they may cut payouts if their earnings decline. Similarly, in recent months, the strategy also had less exposure to the Yield factor than peers. Additionally, this strategy has demonstrated a preference for high-momentum stocks in these years. Momentum strategies wager that market outperformers will continue to outperform, and laggards will continue to lag. Higher exposure to the former could mean the managers are overweighting stocks on winning streaks. In recent months, however, the strategy had less Momentum factor exposure 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 consumer cyclical by 6.3 percentage points in terms of assets compared with the category average, and its consumer defensive allocation is similar to the category. The sectors with low exposure compared to category peers are industrials and basic materials, with industrials underweighting the average portfolio by 4.7 percentage points of assets and basic materials similar to the average. The strategy owns 27 securities and is relatively top-heavy. Of the strategy's assets, 47.6% are concentrated within the top 10 holdings, compared to the category’s 45.5% average. And finally, in terms of portfolio turnover, looking at year-over-year movements, 113% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Below Average

Process

AdvisorShares Restaurant ETF earns a Below Average People Pillar rating. The team benefits from the experience of the management team, which averages 22 years at this fund. However, the rating is weakened by the instability of talent across its parent firm. The firm's asset-weighted manager tenure of four years suggests it could do more to retain portfolio managers. The parent firm's five-year success ratio of 50% also holds the team back. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median return for the period. The parent's modest success ratio suggests that the firm could do better across its fund lineup.

People

AdvisorShares fails to meet industry-standard stewardship qualities, culminating in a Low Parent Pillar rating. A notable weakness of AdvisorShares is the inexperience of its longest-tenured managers compared with other asset managers. Managing capital through a full market cycle is a challenging prospect for seasoned managers, but with only about four years of average asset-weighted tenure, there's cause for concern. A detractor from the firm's rating is its lower-than-average portfolio management retention over the past five years, as elevated turnover bears watching. The firm's risk-adjusted performance compares similarly to competitors. Across all open-end and exchange-traded funds, the firm's average five-year Morningstar Rating is 3.5 stars, which is about standard.

Parent

Advisorshares Restaurant ETF

EATZ is an actively-managed fund of US-listed companies that derive at least 50% of their net revenue from the restaurant business.

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News for Advisorshares Restaurant ETF ETF (EATZ)