Kelly Residential & Aprtmnt Rl Estt ETF’s management team is rated Average, but a solid investment process still helps this strategy retain its Morningstar Medalist Rating of Bronze. The portfolio maintains a sizable cost advantage over competitors, priced within the second-lowest fee quintile among peers.  

 The strategy's investment process inspires confidence and earns an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in volatility exposure and yield exposure compared with category peers. Low volatility exposure is attributed to stocks with a lower standard deviation of returns. And a low yield exposure is rooted in holding fewer stocks with high dividend or buyback yields -- instead, typically holding stocks in an early stage of development. The team managing the passive strategy earns the strategy an Average People Pillar rating. The strategy's parent firm has some investor-friendly attributes, like modest portfolio manager turnover and overall affordable fees. As a result, the firm gets an Average Parent Pillar rating.

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. Kelly Residential & Aprtmnt Rl Estt ETF earns an Above Average Process Pillar rating. The leading factor in the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. The firm's five-year retention rate of 100% also contributes to the process. 

The investment strategy as stated in the fund's prospectus is:  The investment seeks to track the total return performance, before fees and expenses, of the Strategic Residential & Apartment Real Estate Sector Index (the “Index”).  The fund adviser employs a “passive management” investment approach designed to track the total return performance, before fees and expenses, of the index. The index is a rules-based index that consists of U.S.- and Canada-listed companies engaged in the Residential and Apartment Real Estate Business. Under normal circumstances, and the fund invests at least 80% of its net assets in Residential and Apartment Real Estate Companies. The fund is non-diversified. 

 The portfolio is overweight in real estate by 2.7 percentage points in terms of assets compared with the category average, and its consumer defensive allocation is similar to the category. The sectors with low exposure compared to category peers are consumer cyclical and financial services; however, the allocations are similar to the category. The portfolio has 27 holdings and is about as top-heavy as the category average, with 62.9% of assets in the top 10 holdings.

Above Average

Process

Strategic’s team earns An Average People Pillar rating. The most important driver of the rating is the fund's structure. It tracks an index, which is helpful because historical data, such as Morningstar's Active/Passive Barometer, finds that index funds have generally outperformed their active counterparts, especially over the long term. The firm's five-year retention rate of 100% also strengthens the rating. Lastly, the rating is limited by the managers' failure to consistently outperform peers at the funds they run, as measured by their combined three-year manager excess returns.

Average

People

In a competitive industry, Strategic doesn't differentiate itself enough, leading to an Average Parent Pillar rating. The firm has proven successful at retaining portfolio management talent, providing continuity for strategies, as displayed by low turnover in the past five years compared with asset management peers. The firm tends to offer open-end and exchange-traded products at lower costs, a strength of the firm. On average, expenses for the firm's funds land in the second-cheapest quintile of category peers. A notable weakness of Strategic is the inexperience of its longest-tenured managers compared with other asset managers. Managing capital through a full market cycle is a challenging prospect for seasoned managers, but with only two years of average tenure across their management team, there is cause for concern.

Parent

Strategic Residential & Apartment Real Estate ETF

RESI tracks a market-cap-weighted index of residential and apartment real estate companies from developed countries.

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News for Strategic Residential & Apartment Real Estate ETF ETF (RESI)