Columbia US ESG Equity Income ETF retains its Morningstar Medalist Rating of Bronze. The portfolio maintains a cost advantage over competitors, priced within the least expensive 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 overweight position 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 team managing this passive strategy earns a Below Average People Pillar rating. The strategy's parent organization earns the firm an 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

Exxon Mobil

Bank of America

Chevron

Broadcom

Home Depot

UnitedHealth Group

Coca-Cola

PepsiCo

Linde

Caterpillar

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. Columbia US ESG Equity Income ETF 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. Noteworthy risk-adjusted performance also contributes to the process. This can be seen in the fund's five-year alpha calculated relative to the category average, which suggests that the process was successful over that period. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 50%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's modest success ratio suggests that the firm could do better across its fund lineup.

The investment strategy as stated in the fund's prospectus is:  The investment seeks results that, before fees and expenses, closely correspond to the performance of the Beta Advantage® International ESG Equity Income Index.  The fund uses an indexing investment approach that seeks to replicate the performance of the index. The fund invests at least 80% of its assets in the component securities of the index and depositary receipts representing such securities. The index was developed and is owned by Columbia Management Investment Advisers, LLC. The index holds and the fund typically invests in foreign companies in at least three countries, and other than the U.S. 

 The portfolio is overweight in energy and consumer defensive relative to the category average by 7.7 and 3.1 percentage points, respectively. The sectors with low exposure compared to category peers are healthcare and financial services, underweight the average by 10.0 and 4.6 percentage points of assets, respectively. The portfolio is positioned across 101 holdings and is relatively top-heavy. Of the strategy's assets, 40.3% are concentrated within the top 10 holdings, compared to the typical peer's 27.4%. And in closing, in terms of portfolio turnover, looking at year-over-year movements, 90% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Above Average

Process

Columbia Threadneedle’s team receives a Below Average People Pillar rating. The team benefits from the strategy's fees, which rank in its category's least costly fifth. Fees reduce net returns, so the team has a lower expense hurdle to overcome. However, the rating is held back by the parent firm's five-year retention rate of 67%, which suggests it could do more to keep its portfolio managers. The parent firm's five-year success ratio of 49% 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.

Below Average

People

Columbia Threadneedle is undergoing significant transitions on the personnel and operational fronts, underpinning an Average rating.

Colin Moore, Columbia CIO for nearly 20 years, retired at the end of 2021; William Davies, who had been CIO of global equities, replaced him. Moore had worked over the past several years to promote collaboration across his investment teams, including compelling portfolio managers to work with a centralized research pool and to act within consistent risk guardrails. The firm also made moves to streamline its product offerings, including merging or liquidating 28 strategies from January 2020 through March 2022.
These are sensible efforts, though there remain ongoing areas of uncertainty for Davies and CEO Ted Truscott to navigate. Though the firm's fixed-income team is mostly stable, its domestic-equity team has struggled for years with elevated turnover. Adding to this complexity, Columbia closed on its acquisition of Bank of Montreal's European investment business in November 2021, gaining numerous new U.S., U.K., and European-domiciled equity strategies, a compelling environmental, social, and governance capability, and a staff of 700 people. Though there are opportunities for Columbia to draw additional resources and capabilities from BMO, including specialists such as Pyrford International, it will take time to assess how these two firms mesh as a combined entity.

Average

Parent

Columbia U.S. ESG Equity Income ETF 

ESGS tracks an index composed of 100 US equities (excluding REITs). Securities are screened for dividend yields and the Investment Managers proprietary ESGM Ratings that draw on the SASB materiality framework.

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News for Columbia U.S. ESG Equity Income ETF ETF (ESGS)