The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  LHA Risk-Managed Income ETF to a Morningstar Medalist Rating of Negative.  Fees are a weakness here. The strategy's lofty fees are a high hurdle to clear, as it is priced within the most expensive quintile among peers.  

 The longest-tenured manager has a wealth of experience, but due to other weaknesses, the 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 overweight position in corporate bonds and has a significant underweight in AA rated bonds compared with category peers. 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 an unsuccessful risk-adjusted track record. As a result, the firm obtains a Below Average Parent Pillar rating.

Analyst Rating

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Morningstar's style-agnostic evaluation of this fund's process seeks to understand whether the strategy has a performance objective and sensible, repeatable execution. LHA Risk-Managed Income ETF earns an Average Process Pillar rating.    The predominant contributor to the rating is the firm's five-year retention rate of 100% over the period. The process is limited by high costs across its parent firm's funds, whose fees rank in their category's second-costliest quintile on average. While this fund's costs are most relevant to investors, the pattern at the broader firm suggests it could do more to keep expenses down.

 Compared with other funds in the Multisector Bond Morningstar Category, this fund maintains significantly lower interest-rate sensitivity through historical portfolios. But in terms of long-term credit risk, it is on par with peers over the past few years. Opening the analysis to additional factors, the portfolio has displayed biases over time, whether towards or away from certain fixed-income instruments. Relative to the average strategy in the category, the managers have been significantly overweight corporate bonds in recent years. In the latest month, the strategy has relatively overweighted corporate bonds compared with its peers as well. Additionally, there's been a notable bias away from AA rated bonds over the past few years. Similarly, in recent months, the strategy also had less exposure to AA rated bonds than peers. Finally, during the past few years, the fund leaned meaningfully away from debt with 10- to 15-year maturities. In recent months, the strategy also had less exposure to debt with 10- to 15-year maturities compared to its peers.

  The portfolio has a lower average credit rating of B, compared with the category average's BB and 93% of the fund's assets are rated non-investment-grade, compared to its peers' 31%. Strategies that take on more credit risk tend to be at their best when markets are as well. This risk contributes to strong performance during bull markets at the cost of losing more on the downside.

Average

Process

LHA Risk-Managed Income ETF earns a Below Average People Pillar rating. The team is bolstered by the firm's five-year retention rate of 100%. However, the rating is held back by the number of months that the management team has been running this vehicle together. Since this is a newly incepted product, more time is needed to monitor the team's capability at executing the strategy. The parent firm's subpar risk-adjusted performance, as shown by its average overall Morningstar Rating of 2.0 stars, also holds the team back. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis.


Kevin Grimes, the longest-tenured manager on the strategy, provides strong guidance, offering 21 years of listed portfolio management experience.  Kevin Grimes has an experienced listed co-manager. Together, they average 17 years of listed portfolio management experience.

Below Average

People

Little Harbor fails to meet industry-standard stewardship qualities, culminating in a Below Average Parent Pillar rating. A notable weakness of Little Harbor 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 about three years of average asset-weighted tenure, there's cause for concern. The Little Harbor roster of open-end and exchange-traded funds has had below-average risk-adjusted performance, as evidenced by its average overall Morningstar Rating of 2.0 stars. The firm's stable portfolio management over the past five years, indicated by a higher-than-average retention ratio, positively impacts its rating.

Parent

LHA Risk-Managed Income ETF

RMIF is an actively managed fund-of-funds that provides diversified coverage of fixed-income securities. The fund seeks current income and capital preservation by using proprietary analysis and a discretionary allocation approach.

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News for LHA Risk-Managed Income ETF ETF (RMIF)