Weakness in ProShares MSCI Europe Dividend Gr ETF's Process and People Pillar ratings limits this strategy to a Morningstar Medalist Rating of Negative. The portfolio maintains a sizable cost advantage over competitors, priced within the second-lowest fee quintile among peers.  

 The strategy receives a Low Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an overweight in quality exposure and an underweight in volatility exposure compared with category peers. A high quality exposure means holding stocks that are consistently profitable, growing, and have solid balance sheets. And low volatility exposure is rooted in stocks that have a lower standard deviation of returns. The team managing this passive strategy earns a Below Average People Pillar rating. The strategy's parent organization is industry standard, albeit with some strong attributes like overall reasonable fees and a favorable lineup success ratio. This earns the firm an Average Parent Pillar rating.

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. ProShares MSCI Europe Dividend Growers earns a Low Process Pillar rating. 

The most meaningful detractor from the rating is the fund's unremarkable long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the process has struggled over that period. The parent firm's five-year risk-adjusted success ratio of 38% also holds the rating back. 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. The parent firm's five-year retention rate of 58% hinders the process further.

 This strategy tends to hold smaller, more growth-oriented companies than its average peer in the Europe Stock Morningstar Category. Looking at additional factor exposure, this strategy has consistently favored high-quality stocks, including those with low financial leverage and solid returns on equity, compared with Morningstar Category peers during recent years. Though it may trail peers during an economic boom, this orientation contributes to helping it weather periods of economic stress better. In recent months, the strategy was more exposed to the Quality factor compared with its Morningstar Category peers as well. The managers have also shown an underweight risk tilt, demonstrated by lower volatility exposure over peers in recent years. Such holdings can limit a strategy's downside, but cause it to lag in bull markets. Compared with category peers, however, the strategy had more exposure to the Volatility factor in the most recent month. In addition, this strategy has constantly held more illiquid stocks, evidenced by holdings' low trading volume, resulting in higher liquidity risk exposure than peers. 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 recent months, the strategy also had less Liquidity factor exposure than 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 healthcare and basic materials relative to the category average by 7.3 and 4.8 percentage points, respectively. The sectors with low exposure compared to category peers are consumer cyclical and financial services, underweight the average by 12.2 and 7.8 percentage points of assets, respectively. The portfolio is composed of 50 holdings and is quite concentrated. Specifically, 26.4% of the portfolio's assets are housed within the top 10 holdings, versus the category average of 21.8%. And finally, in terms of portfolio turnover, looking at year-over-year movements, 20% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Process

ProShares’s team receives a Below Average People Pillar rating. The team is strengthened by the fund's structure. It tracks an index, which is helpful because historical data, such as Morningstar's Active/Passive Barometer, shows that index funds have generally outperformed their active counterparts, especially over longer time periods. However, the rating is limited by the parent firm's five-year success ratio of 32%. 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 subpar success ratio suggests that the firm could do better across its fund lineup. The parent firm's five-year retention rate of 58% also limits the team.

Below Average

People

In a competitive industry, ProShares doesn't differentiate itself enough, leading to an Average Parent Pillar rating. One notable advantage of ProShares is its below-average fees. On average, the firm's open-end and exchange-traded fund fees fall in the second-cheapest quintile of category peers. The firm’s lineup has demonstrated industry-average durability. Its 10-year success ratio is 57%, meaning that 57% of strategies have both survived and beaten their respective category median. A firm's success ratio indicates relative performance and provides insight into a firm’s discipline around investment strategy and product development. ProShares 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

ProShares MSCI Europe Dividend Growers ETF

EUDV tracks an index of developed European companies with a history of stable dividend growth.

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The PMI increased from 50.3 to 51.4 in April, suggesting that the eurozone economy is finally leaving stagnation and returning to growth at the start of the second quarter. Inflationary pressures remain for the service sector, but don't expect this to deter the ECB from cutting rates.

Eurozone PMI Signals A Pickup In Growth

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Along with rising speculation of EUR/USD approaching parity, the old question of how the European Central Bank should react to exchange rate movements is returning. We think that the falling euro is not the ECB's biggest concern on the road to a June rate cut.

A Falling Euro Is Not The ECB's Biggest Headache

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Business activity in the euro area came close to stabilising in March, as provisional PMI® survey data registered only a marginal decline in output of goods and services.

Eurozone Flash PMI Shows Economy Close To Stabilising In March, Price Pressures Ease

The eurozone escaped a technical recession, and a number of indicators suggest the economy is now bottoming out. The ECB is expected to cut rates from June onwards, but more cautiously than the market is currently anticipating.

The Eurozone Economy Is Bottoming Out

The flash estimate shows a decline in eurozone HICP inflation from 2.9% to 2.8% in January, with core inflation declining to 3.3% from 3.4% in December. However, it's too soon to declare victory in the inflation battle. As industry and retail are still struggling with excess inventories, non-energy industrial goods price inflation continues to fall and now stands at 2%.

Eurozone Headline Inflation Falls, But 'Core' Disappoints

Xtrackers MSCI Germany Hedged Equity ETF

iShares MSCI Germany Small Cap ETF

German Inflation Drops To Its Lowest Level Since June 2021

iShares MSCI Europe Financials ETF

The European Central Bank left interest rates unchanged, without conveying any urgency to start cutting rates in the next few months. It seems most likely that June or July would be the preferred time to start cutting rates.

ECB In Little Rush To Cut Rates

Business activity in the euro area fell at the slowest rate for six months in January, according to provisional PMI survey data. The PMI in fact suggests that the Eurozone is enduring its deepest contraction since 2013 (if early pandemic months are excluded), albeit with recent months hinting at a bottoming out of the downturn.

Eurozone Prices Rise At Increased Rate At Start Of 2024 As Downturn Moderates

Insurers likely face a very different investment regime today than they have in the past, with higher and more volatile interest rates as well as structurally higher inflation.

Brave New World: 2024 European Insurance Outlook

Europe managed to avoid an energy crisis despite the Ukraine war, with inflation under control and interest rates peaking. The European Central Bank is expected to lead interest rate cuts, followed by the Bank of England and Scandinavian central banks.

Europe: Big Changes Coming, Good Time To Diversify One's Portfolio

The first question for next week's European Central Bank meeting is how the Bank will react to current market pricing. The second, however, is why should the ECB react to current market pricing.

ECB Preview: Resisting The Pushback

Like their peers in the US, European stocks enjoyed quite a rally over the last two months of the year. In early December the STOXX 600 broke out above the resistance of the summer highs, and while momentum has slowed in the last couple of weeks, earlier this week the index experienced a golden cross.

European Golden Cross

The European Central Bank (ECB) kept its key policy rates on hold today for the second consecutive meeting. The interest rate on the main refinancing operations, the marginal lending facility, and the deposit facility remain at 4.5%, 4.75% and 4.0%, respectively.

December ECB Meeting: A More Hawkish Stance Than The Fed

The ECB will almost surely keep rates on hold at the December meeting. The question is to what extent it will align with the market's aggressive pricing for rate cuts in 2024.

December's ECB Cheat Sheet: A Reality Check For Ultra-Dovish Expectations

The ECB hike cycle seems over, but the shockwaves of tightening will still shape the eurozone economy in 2024. Traditional lags in transmission are now accompanied by longer ones in average interest burden increases, potentially extending the impact of tightening.

2024 Set To Be The Year That The ECB Hike Cycle Is Felt

Next week's challenge for the European Central Bank is how to keep all options open without sounding too dovish but also not too detached from reality. The weak macro economic backdrop no longer justifies rate hikes, even for the hawks.

ECB Preview: The Long Dovish Shift

Slowing inflation, a cooling labour market, and lower expected corporate revenues make a peak in wage growth before the middle of next year likely. While the European Central Bank waits for clarity, this should open the door to earlier rate cuts than currently expected.

Eurozone Wage Growth Is Set To Peak Soon

After hitting a new all-time high in February, the FTSE has struggled to find any sustainable support, hurt by concerns over China, the UK's struggling economy, and high interest rates across the world. We have had some positive data out of China, the UK, and the US this week, which may mean the worst days are behind us.

FTSE Lags EU And U.S. Markets, But Time For Catch Up With Global Indices?

Real GDP growth was minus one percent for the third quarter, while the PMI Index, a measure of economic health, has been in contractionary territory since the middle of this summer. Draghi's concerns about the Eurozone's economic prospects center on the fear that the region is falling further behind both the US and China in terms of global competitiveness.

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Rising wages and higher incomes are boosting Europe's economic recovery, but policymakers may face challenges due to population aging and shrinking workforce. Demographics and shorter working weeks mean employers face fierce competition to find qualified workers and must pay more to retain them.

Europe's Wage Rises Are Aiding Recovery But Economies Face Risks

Eurozone growth turned negative in the third quarter and the next two quarters don't look very promising either. With inflation declining, the case for an additional rate hike is disappearing.

The Eurozone Is Flirting With Recession

Businesses report a slight tick-up in selling price expectations, but hard data still looks benign. Decline in the Economic Sentiment Indicator in October came as no surprise after the PMI had already dropped further into contraction territory.

Eurozone Economy Braces Itself For Prolonged Sluggishness

The European Central Bank increasingly seems to embrace the idea that the peak in policy rates has already been reached. After 10 consecutive hikes, the ECB's decision to leave policy rates unchanged should have been an easy one.

ECB: A Dovish Pause Now, A Peak Soon

With the exception of a brief period of growth during the opening quarter of 2023, euro area manufacturing output has decreased continuously since the middle of 2022. The downturn in new orders and the accelerated depletion of backlogs of orders prompted firms to reduce employment for the first time since January 2021.

Rising Recession Risks As Eurozone Flash PMI Falls In October, Price Pressures Ease Further

If anything, developments since the September meeting have made it even easier for the European Central Bank to pause at its next meeting. As much as the ECB has tried to keep the door to further rate hikes open since the September decision, recent developments have clearly complicated this position.

News for ProShares MSCI Europe Dividend Growers ETF ETF (EUDV)