Defiance Next Gen H2 ETF’s management team is rated Average, but a solid investment process still helps this strategy retain its Morningstar Medalist Rating of Silver. The portfolio maintains a cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy's investment process inspires confidence and earns a High Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in quality exposure and an overweight in volatility exposure compared with category peers. Low quality exposure is attributed to stocks with higher financial leverage and lower profitability. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. The strategy’s management team earns an Average People Pillar rating. The People Pillar rating is indirectly assigned by an analyst rather than algorithmically derived. Please see the notes following pillar section for more details. 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 a high lineup success ratio and a high average Morningstar Rating.

Analyst Rating

Bloom Energy

Ballard Power Systems

Plug Power

VanEck Vectors Intermediate Muni ETF

Air Products and Chemicals

Linde

C3.ai

FuelCell Energy

Ares Capital Corp 6 7/8 % Notes 2007-15.4.47 Global

ReneSola

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. Defiance Next Gen H2 ETF earns a High Process Pillar rating. The predominant contributor to the rating is the parent firm's five-year risk-adjusted success ratio of 100%. 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. This fund tracks an index, which also increases its process rating. Historical data, like Morningstar's Active/Passive Barometer, shows that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. The firm's five-year retention rate of 92% supports the process as well.

The investment strategy as stated in the fund's prospectus is:  The investment seeks to track the total return performance, before fees and expenses, of the BlueStar Hydrogen & NextGen Fuel Cell Index.  The index is a rules-based index that tracks the performance of a group of globally listed equity securities of companies involved in the development of hydrogen-based energy sources and fuel cell technologies. Under normal circumstances, and at least 80% of the fund's net assets (plus borrowings for investment purposes) will be invested in H2 Companies. It is non-diversified. 

 The portfolio is overweight in industrials and basic materials relative to the category average by 75.6 and 18.1 percentage points, respectively. The sectors with low exposure compared to category peers are energy and utilities, underweight the average by 87.2 and 6.5 percentage points of assets, respectively. The portfolio is composed of 31 holdings and is quite concentrated. In particular, 69.2% of the strategy's assets are housed within the top 10 holdings, as opposed to the category average of 51.9%. And finally, in terms of portfolio turnover, on a year-over-year basis, 57% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

High

Process

Defiance’s  team is comparable to peers, resulting in an Average People Pillar rating. There are three managers listed on the fund: Anand Desai, Ernesto Tong, Dustin Lewellyn. Experience on the team is abundant, with 11 years of average portfolio management experience. Together, they manage a total of 28 strategies, with solid long-term prospects. The strategies average a Bronze asset-weighted Morningstar Medalist Rating, indicating a position to deliver positive alpha relative to the category median in aggregate.  

 Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

Average

People

In a competitive industry, Defiance doesn't differentiate itself enough, leading to an Average Parent Pillar rating. Longevity at the firm has been impressive. Its five-year risk-adjusted success ratio is 100%, meaning that 100% of the products have both survived and beaten their respective category median on a risk-adjusted basis. A high success ratio indicates good performance and provides insight into a firm’s discipline around investment strategy and product development. It's encouraging to see Defiance showcase strong risk-adjusted performance across its open-end and exchange-traded funds, with an average five-year Morningstar Rating of 4.0 stars. Defiance's longest-tenured managers do not possess comparable experience as teams at other firms, a cause for concern. Specifically, average tenure within the firm is two years. As such, there is less confidence in the group's ability to manage capital through a full market cycle effectively.

Parent

Defiance Next Gen H2 ETF

HDRO tracks a modified market-cap-weighted index that targets globally-listed firms in the hydrogen and fuel cell segment.

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The world is actively transitioning from fossil fuels to green alternatives; hence the best green hydrogen stocks emerge as a beacon for eco-conscious investment. The escalating conflict in Ukraine only intensifies this global trend as nations consider punitive measures against Russia's oil reserves.

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Green hydrogen is arguably one of the cleanest energy sources and has sparked interest in buying hydrogen stocks. As the world pushes towards net zero, wagering on hydrogen could be one of the most lucrative opportunities for long-term investors.

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NEW YORK--(BUSINESS WIRE)---- $HDRO #ETFs--Today, Defiance ETFs CEO Sylvia Jablonski will be ringing the Closing Bell at the NYSE in honor of HDRO, The Hydrogen ETF. “Hydrogen is becoming essential in the global fight against climate change. With the news of Plug Power and Amazon finalizing an industry-changing deal, where the leading fuel cell maker will power a portion of Amazon's operations with green hydrogen, hydrogen has become a core asset class when it comes to clean energy,” says Sylvia Jablonski, CEO

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Air Liquide SA

Orsted AS

NextEra Energy

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MIAMI--(BUSINESS WIRE)---- $HDRO #ETFs--QTUM & HDRO ETFs will be cross-listed on the Mexican stock exchange, Bolsa Mexicana de Valores (BMV), available for trading as of January 5th 2021. “Clean Hydrogen energy and quantum computing have emerged as groundbreaking sectors for retail and institutional investors. In the world of energy consumption, the number of companies joining the Mexican Hydrogen Association to find alternative energy sources continues to soar, along with the quantum computing arms race.

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The HDRO ETF invests in companies involved in the development of hydrogen-based energy sources and fuel cell technologies. Global clean energy policy initiatives support a strong growth outlook for the adoption of hydrogen power across several sectors and new applications.

News for Defiance Next Gen H2 ETF ETF (HDRO)