Future Fund Long/Short ETF's Average People Pillar and Process Pillar ratings result in a Morningstar Medalist Rating of Neutral. The portfolio maintains a cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy benefits from its experienced portfolio management team. This is a positive driver for the strategy's Average People Pillar rating. The strategy gets an Average Process Pillar rating.  High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And momentum exposure is rooted in holding stocks currently on a winning streak. The strategy's parent organization still has a way to go to reach the industry standard, evidenced by portfolio managers with limited tenures at the firm and unattractive fees. As a result, the firm obtains a Below Average Parent Pillar rating.

Analyst Rating

Alphabet

Eli Lilly

Chipotle

Chart Industries

Halozyme Therapeutics

NVIDIA

salesforce.com

Quanta Services

Charles Schwab

Micron Technology

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. Future Fund Long/Short ETF earns an Average Process Pillar rating. 

The most significant contributor to the rating is the firm's five-year retention rate of 100% over the period. Management team experience, which averages 18 years at this fund, also strengthens the process. Lastly, the process is limited by high costs across its parent firm's funds, whose fees rank in their category's second-costliest quintile on average. While this fund's costs are most relevant to investors, the pattern at the broader firm suggests it could do more to keep costs down.

 This strategy tends to hold larger, higher-growth companies than its average peer in the Long-Short Equity Morningstar Category. Analyzing additional factors, 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 demonstrated more exposure to high-momentum stocks over peers in recent years. Momentum is based on the premise that market outperformers will continue to outperform, and laggards will continue to lag. This means that managers are overweighting stocks currently on a winning streak. Compared with category peers, the strategy also had more exposure to the Momentum factor in the most recent month. During the last few years, this strategy has also tilted in favor of high-quality stocks, those that have demonstrated low financial leverage and solid return on equity. Such holdings could cause it to trail peers during economic booms, but help it better endure busts. In this month, the strategy also had more exposure to the Quality 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 communication services and consumer cyclical relative to the category average by 7.5 and 6.7 percentage points, respectively. The sectors with low exposure compared to category peers are financial services and industrials, underweight the average by 6.8 and 4.9 percentage points of assets, respectively. The portfolio is positioned across 34 holdings and is relatively top-heavy. Of the strategy's assets, 30.0% are concentrated within the top 10 holdings, as opposed to the category’s 17.5% average.

Average

Process

Future Fund Long/Short ETF earns an Average People Pillar rating. The most important factor behind the rating is the firm's five-year retention rate of 100%. A low expense ratio also contributes to the rating, with costs ranking in its category's second-cheapest quintile. A higher expense ratio reduces net returns, so low costs give this team an advantage. Lastly, the rating is limited by the number of months that the management team has been running this vehicle together. Since this is a newly incepted product, more time is needed to monitor the team's capability at executing the strategy.


David P. Kalis, the longest-tenured manager on the strategy, boasts over 25 years of listed portfolio management experience.  David P. Kalis has an experienced listed co-manager. Together, they average 18 years of listed portfolio management experience. None of the portfolio managers here invest in this fund. This hurts the rating because manager investment would align their interests with the strategy's investors.

People

The Future Fund LLC is a relative newcomer with only a two-year record. There have yet to be signs suggesting that The Future Fund LLC is a topnotch steward. As a result, it is assigned a Below Average Parent rating until there's contrary evidence. The Future Fund LLC currently oversees two vehicles, with a total of $13.7 million under management and a roster of two portfolio managers. Even though The Future Fund LLC is a relatively new firm, it has hired a small team of experienced managers, averaging about 18 years of total industry experience.  

 Lofty fees on open-end and exchange-traded funds at The Future Fund LLC detract from fund performance. Compared with its peers, the average expense ratio of the firm's fund lineup is in the second-costliest quintile.  

 To upgrade the firm's rating, The Future Fund LLC will be expected to build a consistent track record of positive investor experience.

Below Average

Parent

Future Fund Long/short ETF

FFLS is actively managed to provide long/short exposure to US-listed stocks that benefit from emerging secular trends driven by technological, social, and environmental changes. The fund aims to pursue capital appreciation.

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It was a busy week for ETF launches and closures. A total of 15 ETFs launched during the week shortened by the Juneteenth holiday, defying the typically slow launch count for weeks surrounding three-day weekends.

Last Week in ETFs: 15 Launches, Closures Continue Rapid Pace

The Future Fund Active ETF

The Future Fund, an investment advisor led by Gary Black and David Kalis, launched the Future Fund Long/Short ETF (NYSE Arca: FFLS). FFLS is a high-conviction, risk-managed long/short strategy that seeks to capitalize on key megatrends driving the economy.

Future Fund Long/Short ETF Targets World-Changing Megatrends

Led by renowned investor Gary Black, the Fund buys companies that it believes can best exploit the wave of disruptive innovation and shorts companies most likely to lose value as their businesses are disrupted. CHICAGO , June 21, 2023 /PRNewswire/ -- The Future Fund LLC, an SEC-registered investment advisor led by Gary Black and David Kalis, announced today the launch of the Future Fund Long/ Short ETF (NYSE: FFLS ) on the  New York Stock Exchange  effective June 21, 2023.

The Future Fund Launches Long/Short ETF - Investing in Key Megatrends That Are Changing the World

News for Future Fund Long/short ETF ETF (FFLS)