The combination of an Average People Pillar rating and a Below Average Process Pillar rating limit  PGIM Jennison Focused Mid-Cap ETF to a Morningstar Medalist Rating of Neutral.  The portfolio maintains a sizable cost advantage over competitors, priced within the second-lowest fee quintile among peers.  

 The strategy gets a Below 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 quality exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And a low quality exposure is rooted in stocks with higher financial leverage and lower profitability. This management team has a wealth of experience, but still gets an 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

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Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. PGIM Jennison Focused Mid-Cap ETF earns a Below Average Process Pillar rating. 

The process benefits from the experience of the management team, which averages 18 years at this fund. However, the rating is limited by the parent firm's five-year retention rate of 72%, which suggests it could do more to retain its portfolio managers. The parent firm's inferior risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 2.9 stars, also weakens the process. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis.

 This strategy has more exposure to the Growth factor than the Mid-Cap Blend Morningstar Category average. But in terms of market capitalization, it is on par with peers. Analyzing additional factors, this fund has constantly tilted toward stocks with higher trading volumes than its Morningstar Category Peers over the past few years. More-liquid assets contribute to more-flexible exit strategies without price changes and tend to be a ballast during market selloffs. For example, if the portfolio faces successive redemptions in a short period of time, it will be less likely to suffer from a significant loss. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. The strategy has also had a defensive tilt, demonstrated by lower exposure to the quality factor than peers in recent years. This means the fund has avoided holding companies that are consistently profitable, growing, and have solid balance sheets. Such positions do not tend to provide much ballast for a portfolio. Similarly, in recent months, the strategy also had less exposure to the Quality factor than peers. Furthermore, this strategy has leaned toward low-yield stocks over recent years, holding fewer companies with high dividend or buyback yields. Its preference for stocks with lower yields may well lead to a growthier portfolio. However, growth stocks court additional risks if their forecasts do not come to fruition and are often more volatile than companies with stable dividends. In recent months, the strategy also had less Yield factor exposure than its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio has allocations in its top two sectors, energy and consumer defensive, that are similar to the category. The sectors with low exposure compared to category peers are basic materials and consumer cyclical; however, the allocations are similar to the category. The portfolio is composed of 46 holdings and is relatively top-heavy. Of the strategy's assets, 32.6% are concentrated within the top 10 holdings, as opposed to the category’s 15.4% average.

Below Average

Process

PGIM Jennison Focused Mid-Cap ETF earns an Average People Pillar rating. The main contributor to the rating is the combined average five-year excess return of each manager, which shows that the funds they manage have outperformed an average manager. Management team experience, which averages 18 years at this fund, also bolsters the rating. Lastly, the rating is limited by the parent firm's five-year retention rate of 72%, which suggests it could do more to retain its portfolio managers.


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.

Average

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 Jennison Focused Mid-Cap ETF

PJFM is active, investing primarily in global mid-cap companies. The fund aims for capital appreciation.

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PGIM, Prudential Financial's $1.2 trillion investment management arm, has launched four actively managed ETFs. According to PGIM, three of the funds invest in equities, while the fourth ETF targets fixed income.

News for PGIM Jennison Focused Mid-Cap ETF ETF (PJFM)