The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  Kurv Yield Prm Stgy Microsoft (MSFT) ETF to a Morningstar Medalist Rating of Negative.  Fees are a weakness here. The strategy's lofty fees are a high hurdle to clear, as it is priced within the second-costliest 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 strategy merits an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an overweight liquidity exposure and has a considerable overweight in momentum exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And momentum exposure is rooted in holding stocks currently on a winning streak. The strategy's parent organization still has a way to go to reach the industry standard, evidenced by minimal personal investments from portfolio managers and relatively short-tenured portfolio managers. As a result, the firm obtains a Below Average Parent Pillar rating.

Analyst Rating

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. Kurv Yield Prm Stgy Microsoft (MSFT) ETF earns an Average Process Pillar rating. 

The leading factor in the rating is the firm's five-year retention rate of 100% over the period. The size of the portfolio management team also bolsters the process. With three portfolio managers, the fund is reasonably well-resourced. Lastly, 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 expenses low.

 This strategy skews toward smaller, higher-growth companies than its average peer in the Large Blend Morningstar Category. Analyzing additional factors, this strategy has consistently tilted toward companies with relatively higher trading volumes in the last few years. Such stocks may have less potential upside than illiquid holdings, but they are easier to trade during market downturns. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. This strategy has had more exposure to high-momentum stocks over its peers in recent years. Momentum is based on the premise that market outperformers will continue to outperform, and laggards will continue to lag. This means that managers are overweighting stocks currently on a winning streak. Compared with category peers, the strategy also had more exposure to the Momentum factor in the most recent month. In addition, this strategy has not maintained a defensive tilt, demonstrated by low exposure to the quality factor. This means the fund avoids holding firms that are consistently profitable, growing, and have solid balance sheets. Lacking this ballast, the fund's prospects could rest on its ability to beat peers during economic booms. In recent months, the strategy also had less Quality factor exposure than its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section.

Average

Process

Kurv Yield Prm Stgy Microsoft (MSFT) ETF earns a Below Average People Pillar rating. The team benefits from the firm's five-year retention rate of 100%. However, the rating is limited by the number of months that the management team has been running this vehicle together. Since this is a newly incepted product, more time is needed to monitor the team's capability at executing the strategy. Management team experience, which averages seven years at this fund, also holds the rating back.

Below Average

People

Kurv ETFs is a relative newcomer with only five months of operation as a firm under its belt. It is too nascent to prove whether it has an advantage over peer asset managers, earning it a Below Average Parent Pillar rating. The firm currently manages 35 vehicles, with a total of $4.8 million under management across a team of three strategy managers.  The firm's earliest portfolio manager hire, Garrett Paolella, has 10 years of industry experience. 
 
   

 As Kurv ETFs builds and continues to develop a track record, its rating will be adjusted accordingly.

Parent

Kurv Yield Premium Strategy Microsoft MSFT ETF

MSFY seeks to provide current income and capped gains on the Microsoft stock (MSFT) through a synthetic covered call strategy, collateralized by cash and short-term fixed-income instruments. The actively managed fund uses both standardized exchange-traded and FLEX options.

TORONTO--(BUSINESS WIRE)---- $MSFY #Cboe--Cboe Canada welcomes Purpose Investments for the launch of two additional yield-focused single stock ETFs.

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