Amplify Thematic All-Stars ETF’s management team is rated Average, but a solid investment process still helps this strategy retain its Morningstar Medalist Rating of Bronze. The portfolio maintains a sizable cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy's sensible investment philosophy merits an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in liquidity exposure and an underweight in quality exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And a low quality exposure is rooted in stocks with higher financial leverage and lower profitability. The team managing the passive strategy earns the strategy an Average People Pillar rating. The strategy's parent organization earns the firm a Below Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

Analyst Rating

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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. Amplify Thematic All-Stars ETF earns an Above Average Process Pillar rating. The largest 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 firm's five-year retention rate of 93% also strengthens the process. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 30%. The measure indicates the percentage of a firm's funds that survived and outperformed 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.

The investment strategy as stated in the fund's prospectus is:  The investment seeks investment results that generally correspond (before fees and expenses) to the price and yield of the ETF All-Stars Thematic Composite Index.  The index seeks to provide access to the equity securities of a diversified basket of U.S. and non-U.S. companies that are owned by exchange-traded funds (“ETFs”) included in select “thematic” market segments. The fund invests in the underlying securities held by the ETFs and which include common stocks and/or depositary receipts. The fund is non-diversified. 

 The portfolio is overweight in consumer cyclical and financial services relative to the category average by 4.2 and 3.6 percentage points, respectively. The sectors with low exposure compared to category peers are technology and communication services, with technology underweighting the average portfolio by 11.9 percentage points of assets and communication services similar to the average. The portfolio is composed of 123 holdings and is less top-heavy than peers. Specifically, 33.0% of the portfolio's assets are concentrated within the top 10 fund holdings, as opposed to the category average's 52.4%. And finally, in terms of portfolio turnover, on a year-over-year basis, 66% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Above Average

Process

Amplify’s team earns An Average People Pillar rating. The largest contributor to the rating is the firm's five-year retention rate of 93%. The size of the portfolio management team also supports the rating. With two portfolio managers, the fund is reasonably well-resourced. Lastly, the rating is limited by the managers' failure to consistently outperform peers at the funds they run, as measured by their combined three-year manager excess returns.

Average

People

While differentiated from much of the competition, Amplify ETFs' concentrated lineup of largely thematic exchange-traded funds harbors considerable risk. It earns a Below Average Parent Rating.

Amplify targets niches not previously explored by larger ETF firms. This leads to product launches in relatively narrow parts of the market like cannabis, online retail, and battery technology. A recent acquisition of 12 mostly thematic ETFs from ETF Managers Group only enhances this focus. Products like these tend to be extremely concentrated and volatile, inviting significant risks to their investors, not the least of which are ill-timed purchases and sales. Because of these risks, product success is unpredictable and leads to more closures than there are among traditional strategies. Since its 2016 founding, Amplify has merged or liquidated several ETFs that failed to gain traction or produced poor results.

Five subadvisors are responsible for the day-to-day management of Amplify's 29 ETFs. The firm regularly reviews subadvisor activity and performance and risk data but does not have a dedicated risk management team. Overall, its subadvisory relationships seem to emphasize product development and distribution rather than long-term, proven investment merit.

Amplify ETFs does what it sets out to do—offer investors differentiated ETF strategies—and leadership comes with considerable ETF experience. The firm's ETFs are not cheap but neither are they particularly pricey. Many levy category-competitive fees. Few of Amplify's ETFs should be considered core holdings, but they can serve a purpose for investors seeking specific exposures so long as shareholders understand the risks embedded.

Below Average

Parent

Amplify Thematic All-Stars ETF

MVPS tracks an index that aims to give a consensus view on which companies best align with select investment themes. The index selects and weights stocks based on publicly-available ETF ownership data.

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On Wednesday, Amplify ETFs announced the launch of its newest ETF, the Amplify Thematic All-Stars ETF (MVPS), per a press release.  MVPS is a thematic ETF that seeks to capture the top thematic investments within ETFs all in one place, making it a one-stop-shop for investors looking for the best-in-class performers across given themes.

Amplify ETFs Launches New Fund that Invests in the ‘MVPS'

DENVER, July 21, 2021 /PRNewswire/ -- ETF Action is pleased to announce that the ETF All-Stars Thematic Composite Index has been licensed by Amplify ETFs for the Amplify Thematic All-Stars ETF (NYSE: MVPS), which begins trading today. "The extraordinary growth across thematic ETFs clearly demonstrates investors are looking to allocate beyond traditional sectors and industries, but with so many options and wide divergence in returns, determining which strategies to use is both a daunting and potentially risky endeavor," said Mike Akins, CEO & Founding Partner of ETF Action.

ETF Action's ETF All-Stars Thematic Composite Index Licensed by Amplify ETFs

News for Amplify Thematic All-Stars ETF ETF (MVPS)