The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  R3 Global Dividend Growth ETF to a Morningstar Medalist Rating of Neutral.  The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.  

 The longest-tenured manager has a wealth of experience, but due to other weaknesses, the strategy earns a Below Average People Pillar. The strategy earns an 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 has a considerable overweight in yield exposure compared with category peers. Low volatility exposure is attributed to stocks with a lower standard deviation of returns. And a high yield exposure is rooted in holding high dividend-paying or buyback stocks. The strategy's parent organization doesn't stand out, earning the firm an Average Parent Pillar rating. It has displayed a handful of investor-friendly attributes including modest portfolio manager turnover and overall low fees.

Analyst Rating

Microsoft

Chevron

JPMorgan Chase & Co

MoneyLion

BlackRock

Philip Morris

Shell PLC

Coca-Cola

Rollins

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. R3 Global Dividend Growth ETF earns an Average Process Pillar rating. 

The most notable contributor to the rating is the firm's five-year retention rate of 100% over the period. A reasonable level of diversification across individual securities also strengthens the process. The fund's top 10 holdings account for 31% of assets. Lastly, the process is limited by high costs across its parent firm's funds, whose fees rank in their category's 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 leans toward larger, more undervalued companies compared with its average peer in the Global Large-Stock Blend Morningstar Category. Looking at additional factor exposure, this strategy has consistently exhibited a tilt toward low-volatility stocks or companies whose shares have a history of lower standard deviation of returns, compared with its Morningstar Category peers in recent years. These low-risk stocks are typically at their best when markets are not. Low volatility exposure contributes to limited loss on the downside at the cost of a lag in bull markets. In the latest month, the strategy was also less exposed to the Volatility factor compared with Morningstar Category peers. This strategy's portfolio also has had exposure to more stocks with high dividend or buyback yields over peers in these years. Higher-yield stocks can provide steady income, but also have their risks. Dividend payers may cut payouts, for instance, if their earnings fall. Compared with category peers, the strategy also had more exposure to the Yield 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 financial services and energy relative to the category average by 9.1 and 4.7 percentage points, respectively. The sectors with low exposure compared to category peers are technology and industrials, underweight the average by 7.9 and 6.2 percentage points of assets, respectively. The strategy owns 51 securities and is relatively concentrated. In particular, 30.7% of the fund’s assets are housed within the top 10 holdings, as opposed to the typical peer's 25.7%.

Average

Process

R3 Global Dividend Growth ETF earns a Below Average People Pillar rating. The team is supported by the firm's five-year retention rate of 100%. However, the rating is weakened by fees that rank in its category's middle quintile. That could be worse, but investors would get better net results if fees were even lower. The number of months that the management team has been running this vehicle together also holds the rating back. Since this is a newly incepted product, more time is needed to monitor the team's capability at executing the strategy.


Cliff Remily’s veteran status, with 15 years of listed portfolio management experience, brings a wealth of experience to the table. They are currently not a named manager on any additional investment vehicles, narrowing their focus to one strategy. The team is small but adequately equipped, with only one other supporting manager. Together, the two listed managers have nine years of average listed portfolio management experience.

Below Average

People

Even though R3 ETFs only has a two-year track record, it has shown to be an industry-standard steward, warranting an Average Parent Pillar rating. R3 ETFs currently manages one vehicle, with a total of $25.1 million under management and a bench of two portfolio managers.   

 R3 ETFs does not differentiate itself on costs. Across the open-end and exchange-traded product lineup, its average net expense ratio positions it in the middle quintile of firms.  

 To maintain an Average rating, R3 ETFs needs to maintain a consistent track record of positive investor experience.

Parent

R3 Global Dividend Growth ETF

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