The combination of a middling Process Pillar rating and a Low People Pillar rating limit  RiverFront Dynamic US Dividend Advtg ETF to a Morningstar Medalist Rating of Negative.  The portfolio maintains a sizable cost advantage over competitors, priced within the second-cheapest fee quintile among peers.  

 The management team doesn't personally invest much alongside shareholders. This is a large contributor to the strategy's Low People Pillar. The strategy merits an Average Process Pillar rating.  High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And a high yield exposure is rooted in holding high dividend-paying or buyback stocks. Although this strategy's parent firm still has a way to go to be a high-quality steward, it has bright spots like portfolio managers who invest a notable amount in their strategy but could focus on a cohort of unseasoned portfolio managers. As a result, the firm earns a Low Parent Pillar.

Analyst Rating

Microsoft

Apple

NVIDIA

Amazon

Exxon Mobil

Alphabet

Equitrans Midstream

Merck

Booking Hlds

Antero Midstream Partners

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. RiverFront Dynamic US Dividend Advtg ETF earns an Average Process Pillar rating. 

The leading factor in the rating is the fund's excellent long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category average, which suggests that the managers have shown skill in their allocation of risk. Management team experience, which averages 23 years at this fund, also bolsters the rating. Lastly, the process is limited by the instability of management across its parent firm. The firm's asset-weighted manager tenure of eight years suggests it could do more to retain portfolio managers.

 This strategy leans toward smaller, more undervalued companies compared with its average peer in the Large Blend Morningstar Category. Analyzing additional factors, the fund has held stocks with higher trading volumes compared to Morningstar Category Peers in the past few years. More-liquid assets are easier to buy and sell without adversely moving their prices and tend to provide some ballast during market selloffs. They also are easier to sell to meet redemptions if a host of investors decide to leave the fund in a short period of time. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. The managers have also tended to overweight yield during recent years, shown by the portfolio's high exposure to dividends or buybacks. Higher-yield stocks can provide steady income, but also have their risks. Dividend payers may cut payouts, for instance, if their earnings fall. Compared with category peers, the strategy also had more exposure to the Yield factor in the most recent month. This strategy also has tilted toward low-quality stocks, companies with higher financial leverage and lower profitability over these years. Lacking this ballast, the fund's prospects could rest on its ability to surpass peers during economic booms. In recent months, the strategy also had less Quality 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 is overweight in energy and real estate relative to the category average by 7.3 and 5.1 percentage points, respectively. The sectors with low exposure compared to category peers are industrials and healthcare, underweight the average by 5.3 and 2.9 percentage points of assets, respectively. The portfolio is composed of 79 holdings and its assets are more dispersed than the typical peer in the category. In the most recent disclosure, 37.3% of the strategy's assets were concentrated in the top 10 fund holdings, as opposed to the category’s 48.8% average. And in closing, in terms of portfolio turnover, on a year-over-year basis, 50% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Average

Process

RiverFront Dynamic US Dividend Advtg ETF earns a Low People Pillar rating. The most significant detractor from the rating is the parent firm's five-year success ratio of 42%. 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 subpar success ratio suggests that the firm could do better across its fund lineup. The turnover of its management team also holds the team back. The fund last saw a manager change three years ago. The parent firm's five-year retention rate of 62% limits the rating further.


Chris Konstantinos, the longest-tenured manager on the strategy, boasts 23 years of listed portfolio management experience. The strategies they currently manage have an average Morningstar Rating of 2.3 stars, demonstrating disappointing risk-adjusted performance compared with category peers. Chris Konstantinos has an experienced listed co-manager. Together, they average 23 years of listed portfolio management experience. Portfolio managers have made only a small personal investment in the fund, with the maximum investment by either manager being less than $10,000. That isn't close to being enough to align their interests with those of the strategy's investors.

People

ALPS has a ways to go to become an industry-standard steward, resulting in a Low Parent Pillar rating. Despite the negative rating, an area of strength of the firm is manager investment.  Over 34% of the firm's assets are covered by invested managers, in an effort to align portfolio manager and shareholder interests. With an average asset-weighted tenure of eight years among the longest-tenured managers at ALPS, the firm is on par with peers. Seasoned teams tend to have more experience to draw upon should they need to weather turbulent market conditions. The firm charges fees on its open-end and exchange-traded funds that are on par with category peers. On average, fund fees on its products fall in the middle quintile, giving it neither an advantage nor disadvantage compared with the competition.

Parent

RiverFront Dynamic US Dividend Advantage ETF

RFDA is an actively-managed fund that invests in US-domiciled companies with higher dividend yields than their peers within the same sector, among other factors.

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