Increased confidence in Hull Tactical US ETF's prospects relative to its Morningstar Category peers results in  an upgrade in this strategy's Morningstar Medalist Rating to Bronze from Neutral. The portfolio maintains a sizable cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy's sensible investment philosophy merits an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an overweight in quality exposure and volatility exposure compared with category peers. High quality exposure is attributed to stocks with low financial leverage and strong returns on equity. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. The strategy's industry-standard management team still needs to prove it has a competitive advantage and earns an Average People Pillar rating. The strategy's parent firm has some investor-friendly attributes, like a competitive lineup success ratio and a competitive average Morningstar Rating. As a result, the firm gets an Average Parent Pillar rating.

Analyst Rating

SPDR S&P 500 ETF Trust

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. Hull Tactical US ETF earns an Above Average Process Pillar rating. 

The most meaningful contributor to the rating is the fund's excellent long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. The parent firm's five-year risk-adjusted success ratio of 100% also strengthens the process. 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. Their impressive success ratio suggests that the firm does well for investors and that this fund may benefit from that. Lastly, the process is limited by the parent firm's five-year retention rate of 25%, which suggests it could do more to hold onto its portfolio managers.

 This strategy owns more growth stocks than its peers in the Long-Short Equity Morningstar Category. But in terms of size exposure, it does not have much of a bias and resembles the typical portfolio. Analyzing additional factors, this strategy has consistently had a defensive tilt owing to its exposure to high-quality stocks over the past few years. This means the fund holds consistently profitable, growing companies with solid balance sheets that may help it endure downturns better than Morningstar Category peers. In recent months, the strategy was more exposed to the Quality factor compared with its Morningstar Category peers as well. This strategy also has had an overweight bias to the volatility factor over these years, meaning it has owned companies that have a higher historical standard deviation of returns. Such exposure tends to pay off when markets are hot and to be costly when they are not. Compared with category peers, the strategy also had more exposure to the Volatility factor in the most recent month. Additionally, this strategy has had lower yield exposure than peers, with the portfolio holding fewer stocks with high dividend or buyback yields over these years. Its preference for stocks with lower yields may well lead to a growthier portfolio. However, growth stocks court additional risks if their forecasts do not come to fruition and are often more volatile than companies with stable dividends. In recent months, the strategy also had less Yield 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 technology by 7.5 percentage points in terms of assets compared with the category average, and its real estate allocation is similar to the category. The sectors with low exposure compared to category peers are industrials and utilities, with industrials underweighting the average portfolio by 4.3 percentage points of assets and utilities similar to the average. The portfolio is composed of 15 holdings and is quite concentrated. In particular, 70.7% of the portfolio's assets are housed within the top 10 holdings, as opposed to the category’s 11.9% average. And in closing, in terms of portfolio turnover, on a year-over-year basis, 46% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Above Average

Process

Hull Tactical US ETF earns an Average People Pillar rating. The main contributor to the rating is its parent firm's five-year success ratio of 100%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median return for the period. The combined average five-year excess return of each manager also contributes to the rating. It indicates that the funds they manage have outperformed the average manager. Lastly, the rating is limited by the parent firm's five-year retention rate of 25%, which suggests it could do more to hold onto its portfolio managers.

Average

People

Hull Tactical Funds is an industry-standard asset manager, leading to an Average Parent Pillar rating.  It's encouraging to see Hull Tactical Funds showcase strong risk-adjusted performance across its open-end and exchange-traded funds, with an average five-year Morningstar Rating of 5.0 stars. Hull Tactical Funds has faced above-average manager turnover in the past five years. This is a concern, as long-term stability tends to support positive results.

Parent

Capitol Series Trust - Hull Tactical US ETF

HTUS aims for capital appreciation, regardless of market cycle, using long, short and leveraged positions in the S&P 500, along with cash. The actively managed fund primarily uses ETFs to gain exposure to the equity component of its portfolio.

CHICAGO , Aug. 7, 2023 /PRNewswire/ -- The Hull Tactical team is proud to announce that it executed the first options trade for its publicly traded product – Hull Tactical US ETF (HTUS). "We believe the risk-reversal premium, whereby out-of-the-money puts are over-priced relative to out-of-the-money calls, which may be used to create extra alpha and a better portfolio, as measured by Sharpe ratio, compared to a pure index position.

Hull Tactical announces first options trade for Hull Tactical US ETF (HTUS)

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