Weakness in PGIM AAA CLO ETF's Process and People Pillar ratings limits this strategy to a Morningstar Medalist Rating of Neutral. The portfolio maintains a sizable cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy merits a Below Average Process Pillar rating. The strategy suffers from its inexperienced portfolio management team. This largely drives the strategy's Below Average People Pillar rating. The strategy's parent organization earns the firm an Above 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

Morningstar's evaluation of this fund's process aims to determine how repeatable, consistent, and reliable it is, and whether management maintains a competitive advantage. PGIM AAA CLO ETF earns a Below Average Process Pillar rating.    The process benefits from low expenses across its parent firm's funds, whose fees rank in their respective category's middle quintile on average. The pattern of low fees at the firm indicates that it is focused on delivering strong results for investors. However, the rating is limited by the experience of the management team, which averages three years at this fund. The parent firm's five-year retention rate of 72% also detracts from the process.

 The investment strategy as stated in the fund's prospectus is as follows: 


The investment seeks to maximize total return, through a combination of current income and capital appreciation.  Under normal circumstances, the fund invests at least 80% of its investable assets in U.S. dollar-denominated collateralized loan obligations (CLOs) that are, at the time of purchase, rated AAA (or equivalent) by at least one nationally recognized statistical rating organization (NRSRO) or, if unrated, and determined by the subadviser to be of comparable quality. The fund is non-diversified.

Below Average

Process

PGIM AAA CLO ETF earns a Below Average People Pillar rating. The team benefits from the strategy's costs, which rank in its category's least costly fifth. A higher expense ratio reduces net returns, so low costs give this team an advantage. However, the rating is weakened by the experience of the management team, which averages three years at this fund. The parent firm's five-year retention rate of 72% also detracts from the team.


Edwin Wilches brings five years of listed portfolio management experience to the team. The average Morningstar Rating of the strategies they currently manage is 4.8 stars, indicating that their risk-adjusted returns surpassed the category average. Edwin Wilches's supporting team is small and largely unproven, with only three other supporting listed managers. Together, the three average three years of listed portfolio management experience. None of the managers here invest any money in the strategy, which is disappointing, as such investments help align managers' interests with fundholders.

People

PGIM, the asset-management arm of Prudential Financial, has an attractive investment culture that has resulted in a strong lineup of funds, especially in fixed-income and growth equity. It earns an Above Average Parent rating. 
The PGIM funds are subadvised by at-scale subsidiaries of the firm that manage over USD 90 billion in assets each, mainly through Jennison Associates, PGIM Fixed Income, PGIM Quantitative Solutions, and PGIM Real Estate. The first two of these are standouts. Jennison runs the firm's actively managed fundamental equity funds with an established, repeatable investment process; PGIM Fixed Income, which includes Morningstar's Fixed-Income Fund Managers of 2017, remains well-resourced and risk-aware, while the early-2022 broadening of the leadership team has set the stage for sensible succession planning. PGIM Quantitative Solutions and PGIM Real Estate don't stand out as much but are still solid, though the former has dealt with several key management departures in recent years.
PGIM's lineup of 100-plus funds and ETFs spans the globe, but the firm’s assets are concentrated in the United States. At the end of June 2022, funds globally totaled USD 169 billion, only about 13% of PGIM's $1.3 trillion total assets under management; the rest is mostly in institutional accounts and the general account of Prudential's insurance company.

Above Average

Parent

PGIM AAA CLO ETF

PAAA is an actively managed fund that holds USD-denominated collateralized loan obligations with AAA credit rating. Securities are selected using both top-down analysis and bottom-up research.

PGIM, the $1.2 trillion investment management arm of Prudential Financial, has launched the PGIM AAA CLO ETF (NYSE Arca: PAAA). PAAA seeks total return through current income and capital appreciation by investing primarily in U.S. CLOs rated AAA or equivalent.

News for PGIM AAA CLO ETF ETF (PAAA)