The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  ProShares On-Demand ETF to a Morningstar Medalist Rating of Neutral.  The portfolio maintains a cost advantage over competitors, priced within the second-cheapest fee quintile among peers.  

 The team managing the passive strategy earns a Below Average People Pillar. The strategy earns an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a considerable overweight position in liquidity exposure and has an overweight in volatility exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. The strategy's parent organization doesn't stand out, earning the firm an Average Parent Pillar rating. It has displayed a handful of investor-friendly attributes including overall reasonable fees and a favorable lineup success ratio.

Analyst Rating

NVIDIA

Spotify

DoorDash

Uber

Netflix

Lyft

Grab Holdings Ltd

Carolina Trust BancShares

Electronic Arts

Take-Two Interactive Software

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. ProShares On-Demand ETF earns an Average Process Pillar rating. The main driver of 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. Management team experience, which averages 17 years at this fund, also contributes to the process. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 38%. 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 subpar 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, before fees and expenses, that track the performance of the FactSet On-Demand Index (the “index”).  The index includes companies whose principal business is the provision of platforms and services for on-demand access to lifestyle needs including digital media, egaming, fitness, food delivery, ridesharing, or virtual reality experiences, as determined by the index methodology. The fund adviser seeks to remain fully invested at all times in securities and/or financial instruments that provide exposure to the returns of the index without regard to market conditions, and trends or direction. The fund is non-diversified. 

 The portfolio is overweight in consumer cyclical and technology relative to the category average by 14.8 and 8.2 percentage points, respectively. The sectors with low exposure compared to category peers are communication services and financial services, with communication services underweighting the average portfolio by 19.9 percentage points of assets and financial services similar to the average. The strategy owns 33 securities and its assets are more dispersed than peers in the category. In particular, 52.9% of the portfolio's assets are concentrated in the top 10 fund holdings, compared to the category average's 64.0%. And finally, in terms of portfolio turnover, looking at year-over-year movements, 42% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Average

Process

ProShares’s team earns a Below Average People Pillar rating. The team benefits from the fund's structure. It tracks an index, which is helpful because historical data, like Morningstar's Active/Passive Barometer, shows that index funds have generally outperformed their active counterparts, especially over longer time periods. However, the rating is held back by the parent firm's five-year success ratio of 32%. 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 subpar success ratio suggests that the firm could do better across its fund lineup. The parent firm's five-year retention rate of 58% also limits the team.

Below Average

People

In a competitive industry, ProShares doesn't differentiate itself enough, leading to an Average Parent Pillar rating. One notable advantage of ProShares is its below-average fees. On average, the firm's open-end and exchange-traded fund fees fall in the second-cheapest quintile of category peers. The firm’s lineup has demonstrated industry-average durability. Its 10-year success ratio is 57%, meaning that 57% of strategies have both survived and beaten their respective category median. A firm's success ratio indicates relative performance and provides insight into a firm’s discipline around investment strategy and product development. ProShares has faced above-average manager turnover in the past five years. This is a concern, as long-term stability tends to support positive results.

Parent

ProShares On-Demand ETF

OND tracks a market-cap-weighted index of global stocks that provides on-demand platforms and services to consumers.

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News for ProShares On-Demand ETF ETF (OND)