Weakness in Foundations Dynamic Core ETF's Process and People Pillar ratings limits this strategy to a Morningstar Medalist Rating of Negative. The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.  

 The strategy gets a Low 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 an underweight in quality exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And a low quality exposure is rooted in stocks with higher financial leverage and lower profitability. The portfolio management team managing the strategy earns a Low People Pillar rating. To be considered a quality steward, this strategy's parent organization needs to improve factors like insignificant personal investments from portfolio managers and portfolio managers with limited tenures at the firm. As a result, the firm obtains a Below Average Parent Pillar 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. Foundations Dynamic Core ETF earns a Low Process Pillar rating. 

The most substantial detractor from the rating is the parent firm's five-year risk-adjusted success ratio of 0%. 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 relatively low success ratio suggests that the firm could do better across its fund lineup. Management team experience, which averages five months at this fund, also limits the process. The fund's concentrated portfolio holds the process back as well, with its top 10 holdings accounting for 98% of assets. Concentration can lead to outperformance, but it amplifies the risk of a blowup.

 This strategy targets smaller plays than its peers’ average in the Large Blend Morningstar Category. But in terms of style (value/growth) exposure, it is similar. Looking at additional factor exposure, this strategy has consistently tilted toward companies with relatively higher trading volumes in the last few years. This gives the managers more flexibility during bear markets to sell without adversely affecting prices. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. This strategy has also favored low-quality stocks. This means the fund avoids holding companies that are consistently profitable, growing, and have solid balance sheets. Such positions do not tend to provide much ballast for a portfolio. Similarly, in recent months, the strategy also had less exposure to the Quality factor than peers. In addition, this strategy has exhibited a tilt toward higher-volatility stocks in these years, meaning companies that have a higher historical standard deviation of returns compared with peers. Such exposure tends to pay off when markets are hot and to be costly when they are not. In this month, the strategy also had more exposure to the Volatility factor 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 real estate by 2.9 percentage points in terms of assets compared with the category average, and its industrials allocation is similar to the category. The sectors with low exposure compared to category peers are technology and communication services, with technology underweighting the average portfolio by 4.6 percentage points of assets and communication services similar to the average. The strategy has only reported a handful of holdings, and is in a category where the typical fund has 49.5% of assets within the top 10 holdings.

Process

Foundations Dynamic Core ETF earns a Low People Pillar rating. The most significant detractor from the rating is the experience of the management team, which averages five months at this fund. The parent firm's inferior risk-adjusted performance, as shown by its average overall Morningstar Rating of 2.0 stars, also detracts from the team. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis. The number of months that the management team has been running this vehicle together limits the rating further. Since this is a newly incepted product, more time is needed to monitor the team's capability at executing the strategy.

People

In an increasingly competitive industry, Regents Park Funds falls behind on a number of key metrics, resulting in a Below Average Parent Pillar rating. A quality holding back Regents Park Funds from the top tier of stewards is its managers' limited personal investments in their respective products, which helps to align portfolio manager and shareholder interests. Currently, none of the firm’s assets are covered by invested managers. Regents Park Funds's longest-tenured managers do not possess the same experience as management teams at other firms, a detractor from its rating. Specifically, average asset-weighted tenure within the firm is only four years.

Below Average

Parent

Foundations Dynamic Core ETF

FDCE is an actively managed fund-of-funds that provides exposure to the US equities market. The fund has few limitations in terms of market-cap or style of equity investing. Selection and weighting are based on volatility.

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