Monarch Ambassador Income ETF's Average People Pillar and Process Pillar ratings result in a Morningstar Medalist Rating of Neutral. Fees are a weakness here. The strategy's lofty fees are a high hurdle to clear, as it is priced within the highest quintile among peers.  

 The strategy’s management team earns an Average People Pillar rating. The People Pillar rating is indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following the pillar section for more details. The strategy merits an Average Process Pillar rating.  To be considered a quality steward, this strategy's parent organization needs to improve factors like unsubstantial personal investments from portfolio managers and unattractive fees. As a result, the firm obtains a Below Average Parent Pillar rating.

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Monarch Ambassador Income ETF earns an Average Process Pillar rating. 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. The most significant 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. The process is limited by high costs across its parent firm's funds, whose fees rank in their category's highest-cost quintile on average. While this fund's costs are most relevant to investors, the pattern at the broader firm suggests it could do more to keep fees down.

The investment strategy as stated in the fund's prospectus is: 

The investment seeks to replicate investment results that generally correspond, before fees and expenses, to the performance of the Monarch Ambassador Income Index.  The fund generally invests at least 80% of its total assets in the constituents of the index. The index is designed to measure the performance of an investable universe of fixed income securities of varying credit quality and duration, including corporate bonds, lower-quality bonds, known as "high yield" or "junk" bonds, treasury bonds, municipal bonds, mortgage backed securities and convertible bonds, and that provide broad exposure to the U.S. and global bond market.  

 This strategy's 12-month yield is 1.8%, lower than its average peers' 3.9%. A lower yield tends to indicate lower credit risk. The portfolio holds assets with a higher average surveyed credit quality of A, compared with the category average of BBB, and it holds no non-investment-grade assets, despite the average peers' 8%. Strategies with less credit risk may help to provide a reliable ballast during periods of market stress. In terms of long-term interest-rate risk, this strategy is on par with peers. The longer a strategy's duration, the more sensitive it is to shifts in interest rates. This fund, with a 6.8-year duration, is expected to gain 6.8% of its net asset value if interest rates drop by 1 percentage point, and vice versa.

Average

Process

Monarch’s  team is comparable to peers, resulting in an Average People Pillar rating. There are three managers listed on the fund: Dustin Lewellyn, Ernesto Tong, Anand Desai. Experience on the team is abundant, with 11 years of average portfolio management experience. Together, they manage a total of 32 strategies, with a Bronze asset-weighted average Morningstar Medalist Rating, demonstrating their potential to deliver positive alpha relative to the category median in aggregate.  

 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.

People

Monarch has a ways to go to become an industry-standard steward, resulting in a Below Average Parent Pillar rating. None of the firm’s assets are covered by an invested manager. Team members’ investments are regarded as helping to encourage long-term thinking and align portfolio manager and investor interests. Open-end and exchange-traded fund fees are a weakness at the firm, contributing negatively to the rating. On average, the firm charges fees on its funds that are in the most expensive quintile of category peers. With the current market environment of fee compression, this is cause for concern, as investors may flock to alternate asset managers over time to get a better deal. Looking at the firm's risk-adjusted performance, its fund lineup compares similarly to competitors. Across its open-end and exchange-traded funds, the firm's average overall Morningstar Rating is 3.0 stars.

Below Average

Parent

Monarch Ambassador Income ETF

MAMB tracks an index that consists of mainly global fixed income ETFs, plus an alternative sleeve. Constituents are selected and weighted based on the economic cycle.

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The week ending in February 15 featured the Exchange conference in Miami, Florida, and launches were muted as a result. Only one new ETF made its debut during the week.

This Week in ETFs: 1 New ETF & a Raft of Closures

News for Monarch Ambassador Income ETF ETF (MAMB)