PGIM Active High Yield Bond ETF’s Process Pillar rating is Average, but a strong management team still helps this strategy retain its Morningstar Medalist Rating of Silver. The portfolio maintains a cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy’s management team earns a High People Pillar rating. 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 government bonds and AAA rated bonds compared with category peers. The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Venator Materials PLC

Chesapeake Energy

Morningstar's style-agnostic evaluation of this fund's process seeks to understand whether the strategy has a performance objective and sensible, repeatable execution. PGIM Active High Yield Bond ETF earns an Average Process Pillar rating.    The leading factor in the rating is the fund's impressive long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. The depth of the portfolio management team also strengthens the process. With six portfolio managers, the fund is well-staffed. Lastly, the process is limited by the parent firm's five-year retention rate of 72%, which suggests it could do more to retain its portfolio managers.

 Compared with other funds in the High Yield Bond Morningstar Category, this fund's cash position and interest-rate sensitivity are historically in line with peers over the past few years. 

 This strategy's 12-month yield is 7.6%, higher than its average peer's 6.3%. Plus, its 30-day SEC yield (a standardized, point-in-time estimate of the fund’s future income return) sits at 7.4%. Higher yields tend to indicate higher credit risk. But that isn't always the case. Over the past 12 months, the average yield of the fund has been higher than the average yield of its Morningstar Category peers. The portfolio's average surveyed credit quality is on par with peers, with both the fund and the average being rated B.

Average

Process

PGIM Active High Yield Bond ETF earns a High People Pillar rating. Ryan Kelly, the longest-tenured manager on the strategy, provides strong guidance, bringing forward over 25 years of listed portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 2.5 stars, indicating that their risk-adjusted returns have underperformed the category average. The team is composed of a solid supporting cast of five additional named managers, averaging 15 years of listed portfolio management experience. As a team, they manage six investment vehicles together, with a Silver asset-weighted average Morningstar Medalist Rating, demonstrating their potential to deliver positive alpha in aggregate. At least one member of the team has invested $1 million or more of their own capital in the fund, which helps align their interests with the strategy's investors. 

 Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

High

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 Active High Yield Bond ETF

PHYL is an actively managed portfolio of high yield bonds. The fund seeks total return.

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