The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  ProShares S&P MidCap 400 Dividend Arst to a Morningstar Medalist Rating of Neutral.  The portfolio maintains a cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The team managing the passive strategy earns a Below Average People Pillar. The strategy gets an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in liquidity exposure and volatility exposure compared with category peers. Low liquidity risk exposure is attributed to stocks with a low trading volume, limiting managers' flexibility. And low volatility exposure is rooted in stocks that have a lower 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 but is held back by a relatively inexperienced portfolio management team.

Analyst Rating

United Bankshares

Prosperity Bancshares

Williams-Sonoma

Lincoln Electric Hlds

MSA Safety

Bank OZK

UMB Financial

Carlisle Companies

Cullen/Frost Bankers

National Retail Properties

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 S&P MidCap 400 Dividend Arst earns an Average Process Pillar rating. 

The largest contributor to the rating is that this fund tracks an index. Historical data, such as Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Excellent risk-adjusted performance also supports the rating. This can be seen in the fund's five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 43%. 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 modest success ratio suggests that the firm could do better across its fund lineup.

 This strategy skews toward smaller, more undervalued companies compared with its average peer in the Mid-Cap Blend Morningstar Category. Analyzing additional factors, this strategy continually held some stocks with low trading volume over the last few years. Less-liquid stocks might offer strong returns to compensate for their risks, but they can be harder and more expensive to trade in bear markets. In the latest month, the strategy was also less exposed to the Liquidity factor compared with Morningstar Category peers. This strategy has also tilted toward low-volatility stocks in recent years, meaning those that have a lower standard deviation of returns. These companies have historically been a valuable ballast to steady portfolio returns during market downturns. Similarly, in recent months, the strategy also had less exposure to the Volatility factor than peers. Additionally, this strategy's portfolio has held more stocks with high dividend or buyback yields than peers over recent years. High-yield stocks tend to be associated with more mature, profitable businesses that can grow as well as provide a stream of income. Such stocks could suffer, however, if setbacks force them to cut their dividends. In this month, the strategy also had more exposure to the Yield factor over 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 is overweight in utilities and financial services relative to the category average by 17.1 and 15.4 percentage points, respectively. The sectors with low exposure compared to category peers are technology and healthcare, underweight the average by 16.4 and 5.8 percentage points of assets, respectively. The strategy owns 47 securities and is relatively concentrated. In particular, 25.4% of the strategy's assets are housed within the top 10 holdings, compared with the typical peer's 14.8%. And in closing, in terms of portfolio turnover, this fund trades less regularly than the typical peer in its category, which may result in a lower cost to investors.

Average

Process

ProShares’s team earns a Below Average People Pillar rating. The team is bolstered by the strategy's fees, which rank in its category's cheapest quintile. A higher expense ratio reduces net returns, so low costs give this team an advantage. However, the rating is held back by the parent firm's five-year success ratio of 36%. 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 relatively low 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 area of strength is the firm’s favorable fees for open-end and exchange-traded funds, demonstrating a firm-wide commitment to minimizing costs and maximizing investors’ returns. Fees for funds are, on average, within the second-cheapest quintile of similarly distributed strategies. Longest-tenured managers’ average asset-weighted tenure within the firm is ten years, bringing a wealth of knowledge through a complete market cycle and ultimately contributing positively to the rating. Despite other redeeming qualities as a firm, ProShares has seen some disruption among its portfolio management ranks in the past five years, denoted by elevated turnover compared to peer asset-management firms. Long-term stability tends to support positive results.

Parent

ProShares S&P MidCap 400 Dividend Aristocrats ETF

REGL tracks an equal-weighted index of mid-cap companies that have increased their dividends for at least 15-consecutive years.

ProShares S&P MidCap 400 Dividend Aristocrats ETF holds 46 stocks in the S&P Midcap 400 index with increasing dividends for at least 15 years. The REGL ETF has outperformed the mid-cap benchmark since inception, with lower risk and excellent dividend growth rate. It lags dividend growth ETFs tilted to larger companies due to outperformance of this size segment since 2019.

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News for ProShares S&P MidCap 400 Dividend Aristocrats ETF ETF (REGL)