Weakness in AXS Real Estate Income ETF's People and Process Pillar ratings limits this strategy to a Morningstar Medalist Rating of Negative. The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.  

 The team managing the passive strategy earns a Low People Pillar. The strategy gets a Below Average Process Pillar rating.  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. The strategy's parent organization still has a way to go to reach the industry standard, evidenced by portfolio managers with limited tenures at the firm and above-average portfolio manager turnover. As a result, the firm obtains a Low Parent Pillar rating.

Analyst Rating

Arbor Realty Trust

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Starwood Property

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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. AXS Real Estate Income ETF earns a Below Average Process Pillar rating. The process is bolstered by tracking 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. However, the rating is limited by the parent firm's five-year risk-adjusted success ratio of 26%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's subpar success ratio suggests that the firm could do better across its fund lineup. The parent firm's disappointing risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 2.5 stars, also limits the process. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis.

The investment strategy as stated in the fund's prospectus is:  The investment seeks to track the performance, before fees and expenses, of the Gapstow Real Estate Income Index.  The fund uses a “passive management” approach to track the performance, before fees and expenses, of the index. Under normal circumstances, at least 80% of the fund’s net assets, plus borrowings for investment purposes, will be invested in the component securities of the index. The index consists primarily of common stocks of U.S. publicly traded real estate investment trusts that focus on owning commercial and residential mortgages and mortgage-backed securities and to a lesser extent, and publicly traded closed-end funds. It is non-diversified. 

 The portfolio is overweight in real estate by 3.5 percentage points in terms of assets compared with the category average, and its healthcare 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 is composed of 29 holdings and its assets are more dispersed than the typical peer in the category. In the most recent disclosure, 45.6% of the strategy's assets were concentrated in the top 10 fund holdings, compared to the category average's 61.5%. And finally, in terms of portfolio turnover, this fund trades more frequently than its average peer, potentially racking up additional expenses for investors and creating a drag on performance.

Below Average

Process

AXS’s team receives a Low People Pillar rating. The most meaningful detractor from the rating is its parent firm's inferior risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 2.5 stars. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis. The parent firm's five-year retention rate of 48% also limits the team. The managers' failure to consistently outperform peers at the funds they run, as measured by their combined three-year manager excess returns, limits the rating as well.

People

AXS fails to meet industry-standard stewardship qualities, culminating in a Low Parent Pillar rating. Longest-tenured managers have three years of average asset-weighted tenure, which is slim compared with peer firms. In isolation, this doesn't bode well as the current managers have limited experience running strategies. AXS management has lacked continuity over the past five years, denoted by higher-than-average portfolio manager turnover, which detracts from the firm's stewardship rating.

Parent

AXS Real Estate Income ETF

RINC tracks a modified equal-weighted index that provides diversified exposure to US mortgage REITs. The fund uses leverage to seek high yields as compared to other asset classes.

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Hi! In this week's ETF Wrap, you'll see the spot in markets investors liked in August as ETF flows trended below the historical average in a down month for stocks.

ETF flows ‘swoon' in August as this area of bonds dominate

NEW YORK, Aug. 28, 2023 /PRNewswire/ -- AXS Investments, a leading asset manager providing access to alternative investments for income, growth and diversification, is today adding a new ETF to its fund lineup: the AXS Real Estate Income ETF (RINC). RINC seeks to track the performance of the Gapstow Real Estate Income Index (GREI) and is designed for investors looking for a differentiated source of high yield.

AXS Investments Teams with Gapstow Capital Partners to Transform the High Yield Space with RINC, a Unique Real Estate Income ETF

AXS Investments has launched an ETF that targets publicly traded mortgage REITs (mREITs) that own and/or originate real estate debt. The AXS Real Estate Income ETF (NYSE Arca: RINC) tracks the performance of the Gapstow Real Estate Income Index.

AXS Investments Targets Mortgage REITS With RINC

News for AXS Real Estate Income ETF ETF (RINC)