The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  CCM Affordable Housing MBS ETF to a Morningstar Medalist Rating of Neutral.  The portfolio maintains a sizable cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy's management team is about as experienced as others, but due to other weaknesses, the 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 significant underweight position in AA rated bonds and government bonds compared with category peers. The strategy's parent organization still has a way to go to reach the industry standard, evidenced by steep fees and above-average turnover among its portfolio managers. As a result, the firm obtains a Below Average Parent Pillar rating.

Analyst Rating

Morningstar's evaluation of this fund's process seeks to determine how repeatable, consistent, and reliable it is, and whether management maintains a competitive advantage. CCM Affordable Housing MBS ETF earns an Average Process Pillar rating.    The size of the portfolio management team strengthens the process. With four portfolio managers, the fund is reasonably well-resourced. The process is limited by the experience of the management team, which averages eight years at this fund.

 Compared with other funds in the Intermediate Government Morningstar Category, this fund consistently took on lower credit risk over the past few years. Opening the analysis to additional factors, the portfolio has displayed biases over time, whether towards or away from certain fixed-income instruments. Compared with the category average, the managers have been substantially underweight AA rated bonds in recent years. In the latest month, the strategy has also relatively underweighted AA rated bonds compared with Morningstar Category peers. Additionally, the managers have shown a sector bias away from government bonds over the past few years. Similarly, in recent months, the strategy also had less exposure to government bonds than peers. Finally, during the past few years, the fund leaned meaningfully away from debt with one- to three-year maturities. In recent months, the strategy also had less exposure to debt with one- to three-year maturities compared to its peers.

 This strategy's 12-month yield is 3.3%, which mirrors its average peer. It also has a 3.5% 30-day SEC yield (a standardized, point-in-time estimate of the fund’s future income return). The portfolio holds assets with a higher average surveyed credit quality of AAA, compared with the category average of AA, and it holds no non-investment-grade assets, similar to its peers' average. Strategies that take on less credit risk can often weather more-adverse market conditions.

Average

Process

CCM Affordable Housing MBS ETF earns a Below Average People Pillar rating. The team is strengthened by the size of its portfolio management team. With four portfolio managers at the helm, the fund is reasonably well-resourced. Management team experience, which averages eight years at this fund, detracts from the team.


None of the portfolio managers here invest in this fund. This hurts the rating because manager investment would align their interests with the strategy's investors.

Below Average

People

Community Capital has a ways to go to become an industry-standard steward, resulting in a Below Average Parent Pillar rating. Community Capital charges fees for open-end and exchange-traded funds on par with respective category peers. On average, the firm's fund fees are in the middle quintile. With the current market environment of fee compression, this is cause for concern, as investors may flock over time to other asset managers to get a better deal. Community Capital has undergone a bout of turnover in the past five years, as seen in its lower-than-average portfolio manager retention. This is a concern, as long-term stability tends to support positive results. The product lineup at Community Capital has exhibited exemplary durability when looked at over the past three years. Notably, its three-year risk-adjusted success ratio stands at 100%, meaning that 100% of its products have survived and beaten their respective category median on a risk-adjusted basis.

Parent

CCM Affordable Housing MBS ETF

OWNS seeks to generate current income from an actively managed portfolio of investment grade, fixed income securities backed by mortgage loans made to low- and moderate-income borrowers and minorities.

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