The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  Madison Aggregate Bond ETF to a Morningstar Medalist Rating of Neutral.  The portfolio maintains a cost advantage over competitors, priced within the second-cheapest fee quintile among peers.  

 The longest-tenured manager has a wealth of experience, but due to other weaknesses, the strategy earns a Below Average People Pillar. The fund's assessment garners an Average Process Pillar rating. The strategy's parent organization earns the firm an Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

Analyst Rating

Morningstar's style-agnostic investment process evaluation looks for strategies that should be able to outperform their Morningstar Category index on a risk-adjusted basis over time. Madison Aggregate Bond ETF earns an Average Process Pillar rating.    The predominant contributor to the rating is the parent firm's five-year risk-adjusted success ratio of 55%. 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. Management team experience, which averages 25 years at this fund, also supports the rating. Lastly, the process is limited by its parent firm's risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 3.0 stars. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis.

 Compared with other funds in the Intermediate Core Bond Morningstar Category, this fund, historically, hews closely to peers' credit and interest-rate sensitivity over the past few years. Moreover, it displays no significant biases in terms of credit quality, bond sectors, or maturity when compared to its category peers in recent years.   

  The portfolio's average surveyed credit quality is on par with peers, with both the fund and the average being rated A.

Average

Process

Madison Aggregate Bond ETF earns a Below Average People Pillar rating. The team benefits from the strategy's reasonable costs, with fees that rank in its category's middle quintile. However, the rating is weakened by the parent firm's five-year success ratio of 39%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup. The number of months that the management team has been running this vehicle together also holds the rating back. Since this is a newly incepted product, more time is needed to monitor the team's capability at executing the strategy.


Steve Sanders, the longest-tenured manager on the strategy, boasts over 25 years of listed portfolio management experience. They are currently not managing any other investment vehicles, with their focus devoted to this strategy. Steve Sanders has an experienced listed co-manager. Together, they average over 25 years of listed portfolio management experience. None of the portfolio managers here invest in this fund. This hurts the rating because manager investment would align their interests with the strategy's investors.

Below Average

People

Madison Investments boasts some strengths, but they are not enough to stand out in a fiercely competitive arena of active management. It maintains an Average Parent rating.

This almost half-century-old firm is on solid footing, with over $22 billion in assets under management as of December 2022, grounded in a healthy institutional business (roughly three fourths of its AUM lie here) and a growing models-delivery business. The firm's small but experienced investment team is composed of long-tenured managers who have considerable investment in their strategies and some ownership in the firm, which encourages retention. 

Madison has evolved in some ways. After a five-year stint as CEO, Paul Lefurgey relinquished the role in 2022 as Madison moved back to an executive committee management structure, which it had previously used. Longtime distribution head Steve Carl chairs the committee, and Lefurgey remains a CIO. Madison has also made changes to its performance-based remuneration plan moving to a revenue-sharing target model, with a percentage based off five- and 10-year performance. 

But it underwhelms in some important respects. It levies fees ranking no better and mostly worse than its peers', and its small investment team lacks depth. Overall, the firm is an adequate but not exceptional steward.

Parent

Madison Aggregate Bond ETF

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MADISON, Wis., Aug. 29, 2023 (GLOBE NEWSWIRE) -- Madison Investments , an independently-owned investment firm managing $22.9 billion in assets, today announces the launch of the Madison Aggregate Bond ETF (NYSE: MAGG), the latest addition to its suite of actively-managed, income-driven exchange-traded funds (ETFs).

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