Ecofin Global Water ESG retains its Morningstar Medalist Rating of Bronze. The portfolio maintains a cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy's effective investment philosophy supports an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in volatility exposure and yield exposure compared with category peers. Low volatility exposure is attributed to stocks with a lower standard deviation of returns. 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 team managing this passive strategy earns a Low People Pillar rating. The strategy's parent organization is industry standard, albeit with some strong attributes like a competitive lineup success ratio, but is held back by a cohort of unseasoned portfolio managers. This earns the firm an Average Parent Pillar rating.

Analyst Rating

Ferguson PLC

Xylem

Ecolab

American Water Works

Veralto Corp

Pentair

Advanced Drainage Systems

Tetra Tech

A. O. Smith

IDEX

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. Ecofin Global Water ESG earns an Above Average Process Pillar rating. The most important driver of the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Excellent risk-adjusted performance also contributes to the process. This can be seen in the fund's five-year alpha calculated relative to the category index, which suggests that the process was successful over that period. Lastly, the process is limited by the experience of the management team, which averages four years at this fund.

The investment strategy as stated in the fund's prospectus is:  The investment seeks investment results that correspond generally to the price and distribution rate (total return) performance of the Ecofin Global Water ESG Net Total Return IndexSM.  The fund will normally invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in the types of securities suggested by its name (i.e., Water Companies). The index is a proprietary rules-based, modified market capitalization weighted, and float adjusted index designed to track the overall performance of equity securities of global Water Companies listed on developed country exchanges. The fund is non-diversified. 

 The portfolio is overweight in industrials and utilities relative to the category average by 58.1 and 16.6 percentage points, respectively. The sectors with low exposure compared to category peers are basic materials and energy, underweight the average by 39.0 and 27.8 percentage points of assets, respectively. The portfolio is positioned across 42 holdings and is relatively top-heavy. Of the strategy's assets, 58.6% are concentrated within the top 10 holdings, compared to the category’s 23.9% average. And in closing, in terms of portfolio turnover, on a year-over-year basis, 19% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Above Average

Process

TortoiseEcofin’s team receives a Low People Pillar rating. The largest detractor from the rating is the experience of the management team, which averages four years at this fund. The parent firm's five-year success ratio of 15% also limits the team. 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 modest success ratio suggests that the firm could do better across its fund lineup.

People

TortoiseEcofin has some investor-friendly attributes, but other attributes warrant caution, leading to an Average Parent Pillar rating. Longevity at the firm has been impressive. Its five-year risk-adjusted success ratio is 62%, meaning that 62% of the products have both survived and beaten their respective category median on a risk-adjusted basis. A high success ratio indicates good performance and provides insight into a firm’s discipline around investment strategy and product development. With an average tenure of seven years among the longest-tenured managers at TortoiseEcofin, 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. TortoiseEcofin has faced above-average manager turnover in the past five years. This is a concern, as long-term stability tends to support positive results.

Average

Parent

Ecofin Global Water Fund

EBLU tracks an index of water infrastructure and management companies listed in developed countries.

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Let's dedicate Mar 22 to safe and sufficient water. The water industry seems an excellent investment option to tap the growth.

News for Ecofin Global Water Fund ETF (EBLU)