Aztlan NA Nearshoring Stk Sel ETF retains its Morningstar Medalist Rating of Bronze. The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.  

 The strategy's effective investment philosophy supports an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an overweight in liquidity exposure and an underweight in momentum exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And low momentum exposure is rooted in holding stocks that are not currently on a winning streak and instead holding those that managers believe are undervalued. The team managing this passive strategy earns a Below Average People Pillar rating. The strategy's parent organization is industry standard, albeit with some strong attributes like overall affordable fees and high portfolio management retention. This earns the firm an Average Parent Pillar rating.

Analyst Rating

C.H. Robinson Worldwide

Kirby

Innovative Industrial Properties

Landstar System

Union Pacific

GXO Logistics

Hub Group

Matson

Schneider National

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. Aztlan NA Nearshoring Stk Sel ETF earns an Above Average Process Pillar rating. The predominant 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 100% also strengthens the process. Lastly, the process is limited by the size of its portfolio management team, only two portfolio managers.

The investment strategy as stated in the fund's prospectus is:  The investment seeks to track the performance, before fees and expenses, of the Aztlan North America Nearshoring Price Return Index.  The initial universe for the index includes companies that, according to GICS classifications, belong to one of the following industries or sub-industries: (a) Industrial REITs, (b) Office REITs, (c) Real Estate Management & Development, (d) Specialized REITs, (e) Ground Transportation, (f) Air Freight & Logistics, (g) Transportation Infrastructure, or (h) Marine Transportation. The fund will invest all, or substantially all, and of its assets in the component securities that make up the index. It is non-diversified. 

 The portfolio is overweight in industrials and real estate relative to the category average by 76.3 and 11.1 percentage points, respectively. The sectors with low exposure compared to category peers are technology and healthcare, underweight the average by 28.1 and 13.1 percentage points of assets, respectively. The strategy owns 34 securities and is relatively top-heavy. Of the strategy's assets, 54.9% are concentrated within the top 10 holdings, as opposed to the typical peer's 49.5%.

Above Average

Process

Aztlan’s team receives a Below Average People Pillar rating. The team is strengthened by the firm's five-year retention rate of 100%. However, the rating is weakened by the combined average five-year excess return of each manager, which shows that the funds they manage have underperformed their respective category average. 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.

Below Average

People

Even though Aztlan only has a one-year track record, it has shown to be an industry-standard steward, warranting an Average Parent Pillar rating. Aztlan currently oversees two vehicles, with a total of $50.9 million under management and a roster of two fund managers. The team has brought on a few, mostly veteran managers averaging about 11 years of total industry experience.  

 The below-average fees of Aztlan's open-end and exchange-traded funds display a commitment to maximizing investor returns. The average net expense ratio for its funds ranks within the cheapest quintile of peer asset managers.  

 To retain an Average rating, Aztlan needs to maintain a consistent track record of positive investor experience.

Average

Parent

Aztlan North America Nearshoring Stock Selection ETF

NRSH tracks a liquidity-weighted index of North American companies that practice transferring business operations to nearby countries. The fund uses a multi-factor model in selecting industrial real estate and logistics companies.

Azltan is looking to capitalize on the trend of nearshoring with the launch of its latest fund on the New York Stock Exchange. The Aztlan North America Nearshoring Stock Selection ETF (NYSE Arca: NRSH) invests in North America-based stocks that directly benefit from the nearshoring phenomenon.

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