Neither people nor process stand out at Monarch Blue Chips Core ETF, but it gets enough right to help this strategy retain its Morningstar Medalist Rating of Bronze. 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 earns an Average Process Pillar rating.  Low volatility exposure is attributed to stocks with a lower standard deviation of returns. And a low liquidity exposure is rooted in stocks with lower trading volumes, limiting managers' flexibility. The strategy's parent organization still has a way to go to reach the industry standard, evidenced by a lack of inside investments from portfolio managers and unreasonable fees. As a result, the firm obtains a Below Average Parent Pillar rating.

Analyst Rating

General Electric

Allstate

PepsiCo

NVIDIA

Eli Lilly

Oracle

Merck

Amazon

Thermo Fisher Scientific

Emerson Electric

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. Monarch Blue Chips Core ETF earns an Average Process Pillar rating. The main driver of 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 fund's concentrated portfolio, with its top 10 holdings accounting for 44% of assets, supports the process. High-conviction picks court the risk of blowing up, but can also drive outperformance. Lastly, the process is limited by high costs across its parent firm's funds, whose fees rank in their category's most-expensive 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 expenses low.

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 Blue Chips Core Index.  The fund generally invests at least 80% of its total assets in the component securities of the index. The index consists of established, well-recognized companies listed on the S&P 500 from a broad range of industries that demonstrate strength in the marketplace based on fundamental company data such as revenue, revenue growth, net income, and and net income growth. 

 The portfolio is overweight in consumer defensive and financial services relative to the category average by 5.5 and 4.2 percentage points, respectively. The sectors with low exposure compared to category peers are technology and communication services, underweight the average by 11.4 and 3.0 percentage points of assets, respectively. The portfolio is composed of 25 holdings and is diversified among those holdings. In its most recent portfolio, 43.8% of the strategy's assets were concentrated in the top 10 fund holdings, as opposed to the category average's 53.2%.

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, indicating the 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 Blue Chips Core ETF

MBCC tracks an equal-weighted index of companies selected from the S&P 500 Index that are perceived to be fundamentally sound.

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News for Monarch Blue Chips Core ETF ETF (MBCC)