Weakness in TrueShares Tech, AI and Deep Lrng ETF's People and Process Pillar ratings limits this strategy 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 team managing the strategy earns a Low People Pillar. The strategy earns a Low Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a considerable overweight position in liquidity exposure and has a substantial underweight in quality exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And a low quality exposure is rooted in stocks with higher financial leverage and lower profitability. The strategy's parent organization is industry standard, albeit with some strong attributes like a strong risk-adjusted track record, but is held back by high portfolio manager turnover. This earns the firm an Average Parent Pillar rating.

Analyst Rating

NVIDIA

CrowdStrike

Samsara

Advanced Micro Devices

Snowflake

Datadog

Elastic N.V

ServiceNow

SentinelOne

Zscaler

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. TrueShares Tech, AI and Deep Lrng ETF earns a Low Process Pillar rating. 

The main driver of the rating is the parent firm's five-year retention rate of 77%, which suggests it could do more to retain its portfolio managers. Management team experience, which averages four years at this fund, also holds the process back. Lastly, being an actively managed strategy detracts from the process. Historical data, like Morningstar's Active/Passive Barometer, shows that actively managed funds have generally underperformed their passive counterparts, especially over longer time horizons.

 This strategy skews toward smaller, higher-growth companies compared with its average peer in the Technology Morningstar Category. Analyzing additional factors, this strategy has held more highly liquid stocks compared to Morningstar Category Peers in the past few years. More-liquid assets are easier to buy and sell without adversely moving their prices and tend to provide some ballast during market selloffs. They also are easier to sell to meet redemptions if a host of investors decide to leave the fund in a short period of time. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. This strategy has also tilted toward low-quality stocks, companies with higher financial leverage and lower profitability over peers in recent years. Lacking this ballast, the fund's prospects could rest on its ability to beat peers during economic booms. Similarly, in recent months, the strategy also had less exposure to the Quality factor than peers. Additionally, the managers have consistently taken on more risk, demonstrated by higher volatility exposure than peers. This contributes to a higher-risk, higher-reward approach. In this month, the strategy also had more exposure to the Volatility factor over 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 healthcare by 8.9 percentage points in terms of assets compared with the category average, and its consumer cyclical allocation is similar to the category. The sectors with low exposure compared to category peers are communication services and industrials, underweight the average by 3.7 and 2.9 percentage points of assets, respectively. The portfolio is composed of 24 holdings and is relatively concentrated. Specifically, 63.2% of the strategy's assets are housed within the top 10 holdings, compared with the typical peer's 52.3%. And in closing, in terms of portfolio turnover, on a year-over-year basis, 18% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Process

TrueShares Tech, AI and Deep Lrng ETF earns a Low People Pillar rating. The primary determinant of the rating is the experience of the management team, which averages four years at this fund. Turnover at its parent firm also weakens the team. The firm's asset-weighted manager tenure of three years suggests it could do more to retain portfolio managers. The turnover of its management team hinders the team further. Specifically, the fund last had a manager change one year ago.

People

In a competitive industry, TrueMark doesn't differentiate itself enough, leading to an Average Parent Pillar rating. Even so, it's encouraging that the firm showcases strong risk-adjusted performance across its open-end and exchange-traded fund lineup, with an average overall Morningstar Rating of 4.0 stars. TrueMark has undergone a bout of turnover since the firm's inception, as seen in its lower-than-average portfolio manager retention. This is a concern, as long-term stability tends to support positive results. An average tenure of only three years among the longest-tenured managers at TrueMark is concerning. In isolation, seasoned teams tend to have more experience to draw upon should they need to weather turbulent market conditions.

Average

Parent

TrueShares Technology, AI and Deep Learning ETF

LRNZ is actively managed and invests in global equities focused on artificial intelligence and deep learning.

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