Weakness in Angel Oak Mortgage-Backed Securities ETF's Process and People Pillar ratings limits this strategy to a Morningstar Medalist Rating of Negative. The portfolio maintains a cost advantage over competitors, priced within the second-cheapest fee quintile among peers.  

 The strategy earns a Below Average Process Pillar rating. The longest-tenured manager has a wealth of experience, but other weaknesses limit it to a Below Average People Pillar rating. The strategy's parent organization still has a way to go to reach the industry standard, evidenced by an unfavorable average Morningstar Rating and high fees. As a result, the firm obtains a Below Average Parent Pillar rating.

Analyst Rating

Morningstar's evaluation of this fund's process seeks to understand management's investment philosophy, and whether it has been applied consistently over time and can add value across the market cycle. Angel Oak Mortgage-Backed Securities ETF earns a Below Average Process Pillar rating.    The process benefits from the firm's five-year retention rate of 87% over the period. However, the rating is held back by the parent firm's five-year risk-adjusted success ratio of 20%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's modest success ratio suggests that the firm could do better across its fund lineup. High costs across its parent firm's funds, whose fees rank in their respective category's most-expensive quintile on average, also hold the process back. While this fund's costs are most relevant to investors, the pattern at the broader firm suggests it could do more to keep fees low.

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


The investment seeks total return.  The fund will, under normal circumstances, invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in mortgage-backed securities (“MBS”). It may invest up to 20% of its net assets in a variety of asset classes, and including: asset-backed securities (“ABS”). The fund is non-diversified.

 This strategy's 12-month yield is 4.6%, higher than its average peer's 3.9%. Higher yields tend to indicate higher credit risk.

Below Average

Process

Angel Oak Mortgage-Backed Securities ETF earns a Below Average People Pillar rating. The team benefits from the firm's five-year retention rate of 87%. However, the rating is held back by the parent firm's five-year success ratio of 22%. The measure indicates the percentage of a firm's funds that survived and beat 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 managers' failure to consistently outperform peers at the funds they run, as measured by their combined three-year manager excess returns, also holds the team back.


Matthew Kennedy, the longest-tenured manager on the strategy, provides strong guidance, offering 16 years of listed portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 5.0 stars, indicating that their risk-adjusted returns surpassed the category average. Matthew Kennedy is supported by an experienced team, being able to draw on four additional listed managers, who average 10 years of listed portfolio management experience. None of the managers here invest any money in the strategy, which is disappointing, as such investments help align managers' interests with fundholders.

People

In an increasingly competitive industry, Angel Oak falls behind on a number of key metrics, resulting in a Below Average Parent Pillar rating. The risk-adjusted performance of the firm's open-end and exchange-traded funds does not stack up well versus their competitors, with an average overall Morningstar Rating of 2.0 stars. 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 second 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. Angel Oak has had high portfolio management turnover over the past five years compared with peers, detracting from its rating, as long-term stability tends to go together with positive results.

Parent

Angel Oak Mortgage-Backed Securities ETF

MBS is actively managed, seekingtotal returns through investments in various US mortgage-backed securities (MBS) of any credit quality and maturity.

Angel Oak High Yield Opportunities ETF

On Tuesday, Angel Oak Capital Advisors converted two of its existing mutual funds into ETFs. The Angel Oak Mortgage-Backed Securities ETF (NYSE Arca: MBS) and the Angel Oak High Yield Opportunities ETF (NYSE Arca: AOHY) are both actively managed and target the fixed income asset class.

Angel Oak Adds 2 More Fixed Income ETFs

ATLANTA--(BUSINESS WIRE)---- $AOHY #ETF--Angel Oak Capital Advisors completes conversion of two mutual funds to ETFs bringing new actively-managed structured credit funds to investors.

News for Angel Oak Mortgage-Backed Securities ETF ETF (MBS)