Weakness in Regan Floating Rate MBS ETF's People and Process Pillar ratings limits this strategy to a Morningstar Medalist Rating of Negative. The portfolio maintains a cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The longest-tenured manager has a wealth of experience, but due to other weaknesses, the strategy earns a Low People Pillar. The fund gets a Below Average Process Pillar rating. The strategy's parent organization still has a way to go to reach the industry standard, evidenced by portfolio managers with limited tenures at the firm and above-average turnover among its portfolio managers. As a result, the firm obtains a Below Average Parent Pillar rating.

Analyst Rating

Morningstar's style-agnostic evaluation of this fund's process seeks to understand whether the strategy has a performance objective and sensible, repeatable execution. Regan Floating Rate MBS ETF earns a Below Average Process Pillar rating.    The process is strengthened by the experience of the management team, which averages 19 years at this fund. However, the rating is held back by the parent firm's five-year retention rate of 67%, which suggests it could do more to hold onto its portfolio managers. Being an actively managed strategy also detracts from the process. Historical data, such as Morningstar's Active/Passive Barometer, shows that actively managed funds have generally underperformed their passive counterparts, especially over longer time horizons.

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


The investment seeks current income.  Regan Capital, LLC, the fund’s investment adviser, seeks to achieve the fund’s investment objective by investing primarily in floating rate residential mortgage-backed securities (“RMBS”). Under normal circumstances, and at least 80% of the fund’s assets will be invested in floating rate RMBS.

Below Average

Process

Regan Floating Rate MBS ETF earns a Low People Pillar rating. The primary factor behind the rating is the parent firm's five-year retention rate of 67%, which suggests it could do more to retain its portfolio managers. 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. Furthermore, no individual manager has invested more than $1 million in the fund, which would align their interests with fundholders.


The team is backed by Chris Hall, the longest-tenured manager on the strategy, who provides over 25 years of listed portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 4.0 stars, demonstrating impressive risk-adjusted performance. Despite having a small team, the two listed managers boast 19 years of listed portfolio management experience.

People

Regan Capital fails to meet industry-standard stewardship qualities, culminating in a Below Average Parent Pillar rating. A cause for concern at Regan Capital is its inexperienced longest-tenured managers. In particular, the cohort has only three years of average asset-weighted tenure, negatively contributing to the rating. A detractor from the firm's rating is its lower-than-average portfolio management retention since the firm's inception, as elevated turnover bears watching. The firm's lineup has had encouraging initial results. Its three-year risk-adjusted success ratio is 100%, meaning that of the funds with a three-year track record, 100% have survived and beaten their respective category median on a risk-adjusted basis.

Parent

Regan Floating Rate MBS ETF

MBSF seeks current income through an actively managed portfolio comprised of floating-rate residential mortgage-backed securities (RMBS) rated as investment grade.

On Wednesday, Regan Capital, an adviser firm, made its first foray into ETFs by launching the Regan Floating Rate MBS ETF (NYSE Arca: MBSF). MBSF has a net expense ratio of 0.49%.

Regan Capital Enters ETF Space With MBSF ETF

DALLAS--(BUSINESS WIRE)--Regan Capital, an investment firm with $1.3 billion in assets under management, today announced the launch of the Regan Floating Rate MBS ETF (NYSE: MBSF), an actively managed exchange-traded fund that invests primarily in floating rate Agency Residential Mortgage-Backed Securities (RMBS). Agency RMBS typically offer higher yields than Treasury bonds without significant additional risk, since Agency RMBS are issued by government sponsored entities, such as Fannie Mae an.

News for Regan Floating Rate MBS ETF ETF (MBSF)