Weakness in Gabelli Growth Innovators 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 merits a Low Process Pillar rating. The portfolio management team managing the strategy earns a Low People Pillar rating. The strategy's parent organization earns the firm a Below 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

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. Gabelli Growth Innovators ETF earns a Low Process Pillar rating. 

The main detractor from the rating is the parent firm's five-year risk-adjusted success ratio of 21%. 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 parent firm's disappointing risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 2.1 stars, also detracts from the process. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis. Management team experience, which averages six years at this fund, limits the rating as well.

 The investment strategy as stated in the fund's prospectus is as follows:

The investment seeks to provide capital appreciation.  The fund will primarily invest in common stocks of companies that are relevant to its investment theme of innovation. The fund's assets will be invested primarily in a broad range of readily marketable equity securities consisting of U.S. exchange-listed common stock and preferred stock. It may also invest in foreign securities by investing in American Depositary Receipts. 

 The portfolio is overweight in consumer cyclical and communication services relative to the category average by 11.0 and 10.8 percentage points, respectively. The sectors with low exposure compared to category peers are technology and real estate, with technology underweighting the average portfolio by 41.4 percentage points of assets and real estate similar to the average. The portfolio is composed of 29 holdings and is relatively concentrated. In particular, 56.2% of the strategy's assets are housed within the top 10 holdings, as opposed to the category’s 52.3% average. And in closing, in terms of portfolio turnover, looking at year-over-year movements, 87% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Process

Gabelli Growth Innovators ETF earns a Low People Pillar rating. The most meaningful detractor from the rating is the parent firm's five-year success ratio of 30%. 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. Management team experience, which averages six years at this fund, also detracts from the team. The instability of its management team detracts from the rating further. Specifically, the fund last had a manager change two years ago.

People

Renowned value investor Mario Gabelli's investment skill and work ethic have led to Gabelli Asset Management's impressive growth since Gabelli founded the firm in 1976. Assets under management were more than $28.7 billion as of June 2022, and the firm has more than 40 analysts and a handful of long-tenured managers. Despite its ample resources and some recent changes, the 80-year-old Gabelli still has a lot on his plate, and succession concerns endure.
Gabelli is starting to unload some responsibilities, but he still holds significant power and influence at the firm as a portfolio manager and CEO. As of July 2022, Gabelli had no plans to retire, but in August 2022 the firm appointed Doug Jamieson to the office of the CEO alongside Gabelli to assist with operational duties. On the investment side, co-CIOs Kevin Dreyer and Chris Marangi have been more involved in analysts' research and management and are managing all new institutional assets. Still, this transition of power has been a slow work in progress. Gabelli manages 19 funds, four of those solo. Even on the team-managed funds, Gabelli still has a significant amount of assets under his control. Further, Gabelli still controls more than 90% of the public firm's voting rights.
Gabelli Asset Management has not been willing to lower fees across its fund lineup. The firm retains its Below Average Parent rating.

Below Average

Parent

Gabelli Growth Innovators ETF 

GGRW is an actively managed, non-transparent fund that seeks growth of capital and income by targeting US-listed companies with high future earnings potential relative to their current market value and considered to be innovative in their industry. The fund utilizes the Precidian non-transparent model.

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