The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  US Global Jets ETF to a Morningstar Medalist Rating of Negative.  The portfolio maintains a sizable cost advantage over competitors, priced within the second-lowest fee quintile among peers. The strategy changed its peer group last October, moving from the Miscellaneous Sector category to the Industrials Morningstar Category. 

 The team managing the passive strategy earns a Below Average People Pillar. The strategy gets an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in volatility exposure and momentum exposure compared with category peers. High volatility exposure is attributed to companies with a higher standard deviation of returns. And low momentum exposure is rooted in holding stocks that are not currently on a winning streak and instead holding those that managers believe are undervalued. The strategy's parent organization still has a way to go to reach the industry standard, evidenced by a low firmwide success ratio and a disappointing average Morningstar Rating. As a result, the firm obtains a Below Average Parent Pillar rating.

Analyst Rating

Delta Air Lines

American Airlines

Southwest Airlines

United Continental Hlds

SkyWest

Sun Country Airlines

Alaska Air Group

Expedia

Associated Capital Group

Allegiant Travel Company

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. US Global Jets ETF earns an Average Process Pillar rating. The largest contributor to the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Management team experience, which averages 32 years at this fund, also contributes to the process. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 0%. 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 relatively low success ratio suggests that the firm could do better across its fund lineup.

The investment strategy as stated in the fund's prospectus is:  The investment seeks to track the performance, before fees and expenses, of the U.S. Global Jets Index.  The fund uses a "passive management" (or indexing) approach to track the performance, before fees and expenses, of the index. The index is composed of the exchange-listed common stock (or depositary receipts) of U.S. and international passenger airlines, aircraft manufacturers, airports, terminal services companies, and airline-related internet media and services companies, each as determined by independent industry listings (collectively, and “Airline Companies”). The fund is non-diversified. 

 The portfolio is overweight in consumer cyclical by 7.9 percentage points in terms of assets compared with the category average, and its communication services allocation is similar to the category. The sectors with low exposure compared to category peers are technology and industrials, underweight the average by 2.9 and 2.7 percentage points of assets, respectively. The portfolio is positioned across 58 holdings and is less top-heavy than peers. Specifically, 56.0% of the strategy's assets are concentrated within the top 10 fund holdings, as opposed to the category average's 70.5%. And finally, in terms of portfolio turnover, this portfolio's holdings turn over more often than comparable products in its peer group, possibly resulting in higher costs for investors and a drag on performance.

Average

Process

U.S. Global Investors’s team earns a Below Average People Pillar rating. The team benefits from the experience of the management team, which averages 32 years at this fund. However, the rating is limited by its parent firm's subpar risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 2.8 stars. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis. The combined average five-year excess return of each manager also holds the rating back. It suggests that the funds they manage have underperformed their respective category's average return.

Below Average

People

U.S. Global Investors has a ways to go to become an industry-standard steward, resulting in a Below Average Parent Pillar rating. The firm has struggled to provide a durable product shelf, with only a 20% 10-year success ratio, meaning that only 20% have both survived and beaten their respective category median. A low success ratio not only indicates weak performance but also raises flags about a firm’s discipline around investment strategy and product development. The U.S. Global Investors roster of open-end and exchange-traded funds has had below-average risk-adjusted performance, as shown by its average overall Morningstar Rating of 2.3 stars. The firm charges fees on its open-end and exchange-traded funds that are on par with category peers. On average, fees on its funds are within the middle quintile, giving it neither an advantage nor disadvantage compared with the competition.

Parent

US Global Jets ETF

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