Natixis Loomis Sayles Focused Growth ETF’s Process Pillar rating is Average, but a strong management team still helps this strategy retain its Morningstar Medalist Rating of Bronze. The portfolio maintains a cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy’s management team earns an Above Average People Pillar rating. The strategy gets an Average Process Pillar rating.  Momentum exposure is attributed to holding stocks currently on a winning streak and selling those that are on a downtrend. And a low yield exposure is rooted in holding fewer stocks with high dividend or buyback yields -- instead, typically holding stocks in an early stage of development. The strategy's parent organization earns the firm an Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

NVIDIA

Amazon

Microsoft

Alphabet

Netflix

Tesla

salesforce.com

Vertex Pharmaceuticals

Visa

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. Natixis Loomis Sayles Focused Growth ETF earns an Average Process Pillar rating. 

The most substantial contributor to the rating is the firm's five-year retention rate of 83% over the period. Management team experience, which averages 18 years at this fund, also strengthens the process. Lastly, the process 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.

 This strategy has more exposure to the Growth factor than the Large Growth Morningstar Category average. But in terms of size exposure, it is similar to the average. Examining additional factor exposure, this strategy has continually had exposure to high-momentum stocks compared with Morningstar Category peers in the last few years. Momentum is based on the premise that stocks that have recently outperformed will continue to outperform, and those that have underperformed will stay behind. In recent months, the strategy was more exposed to the Momentum factor compared with its Morningstar Category peers as well. This strategy also has had lower yield exposure than peers over these years; its portfolio has held fewer stocks with high dividend or buyback yields. This is demonstrated by the portfolio's low exposure to dividends or buybacks. While companies with high yields provide steady income payments, they may cut payouts if their earnings fall. Similarly, in recent months, the strategy also had less exposure to the Yield factor than peers. In addition, this strategy holds highly liquid companies. This gives the managers more flexibility during bear markets to sell without adversely affecting prices. In this month, the strategy also had more exposure to the Liquidity 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 communication services by 12.8 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 technology and industrials, with technology underweighting the average portfolio by 7.0 percentage points of assets and industrials similar to the average. The portfolio is positioned across 22 holdings and is quite concentrated. Specifically, 67.0% of the portfolio's assets are housed within the top 10 holdings, versus the category average of 53.2%. And finally, in terms of portfolio turnover, looking at year-over-year movements, 4% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Average

Process

With only one listed portfolio manager, Natixis Loomis Sayles Focused Growth ETF earns an Above Average People Pillar rating. Aziz V. Hamzaogullari brings over 18 years of portfolio management experience to the table. Across strategies managed, Hamzaogullari has an average Morningstar Rating of 3.1, indicating above-average risk-adjusted performance.  Isolating the analysis to the fund at hand, Aziz Hamzaogullari has delivered superior performance, outperforming both the category benchmark and average category peer for the past nine-month period. Aziz Hamzaogullari has not disclosed any personal investments in the fund, which is a concern. A manager's personal investment demonstrates an effort to align interests with shareholders and build a proper incentive structure.

 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.

Above Average

People

Paris-based Natixis Investment Managers is the parent to more than a dozen firms of very different sizes globally, some of the largest being U.S.-based Loomis Sayles and Harris Associates, which manages the Oakmark Funds. Each affiliate maintains a large degree of autonomy in terms of investment process, hiring decisions, and operations. The quality of investment culture and stewardship have historically varied significantly from one affiliate to another, and this mix of strengths and weaknesses earns NIM an Average Parent rating.
The firm recently underwent a leadership change: In December 2023, Philippe Setbon replaced Tim Ryan as group CEO. Ryan had been in his current role for less than three years, having joined in 2021 when his predecessor, Jean Raby, left after a four-year stint. While both Ryan and Raby had been external hires, Setbon rose through the ranks internally, having previously served as CEO to NIM’s Paris-based affiliate Ostrum. We will keenly observe which initiatives Setbon will prioritize in the coming year, though we do not anticipate a dramatic shift in priorities compared with the recent past.
Over both Raby's and Ryan’s tenures, the group has focused on shoring up its strongest affiliates. For example, it facilitated Loomis Sayles’ acquisition of McDonnell IM in 2019 and sponsored its hiring of a large team of European credit specialists from a rival firm in 2020. NIM also upped its ownership stake in Australian value-focused manager IML, while preserving that firm’s unique character and incentivizing its veteran staff to stay put.
At the same time, the parent has restructured or divested from some of its weaker businesses. In some cases, such interventions seemed long overdue. For example, Ostrum, which had a history of fund lineup churn, mediocre stewardship, and regulatory failings, saw its fixed-income business merged with rival La Banque Postale Asset Management in 2020, while some of its equity teams were transferred to another one of NIM’s Paris-based boutiques—DNCA. Meanwhile, NIM’s affiliate H2O made the headlines after its investments in illiquid corporate bonds and breach of regulatory limits in 2020 triggered a EUR 75 million fine from the French regulator AMF. (NIM is currently in the process of gradually selling back its share in H2O (which initially stood at 50.01%) to that firm’s co-founders, a process that they expect to take several more years).
Since the H2O crisis, NIM has significantly shored up its risk-control efforts by hiring additional staff, creating a centralized risk and compliance function, and introducing multiple oversight committees, which is positive. Overall, the group is taking some steps in the right direction, though the challenges of a heterogeneous pool of affiliates remain.

Parent

Natixis Loomis Sayles Focused Growth ETF

LSGR is an actively managed, non-transparent fund that focuses on US-listed large-cap stocks but may include companies of any capitalization through a growth investment style. The fund utilizes the Natixis/NYSE non-transparent ETF model.

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