The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  USCF SummerHaven Dyn CmdtyStgy NoK-1 ETF to a Morningstar Medalist Rating of Neutral.  The portfolio maintains a 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 Below Average People Pillar. The fund's assessment garners an Average Process Pillar rating. 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 sizeable amount in their strategy but could focus on a bench of limited-tenure portfolio managers. As a result, the firm receives a Below Average Parent Pillar.

Analyst Rating

Morningstar's evaluation of this fund's process aims to determine how repeatable, consistent, and reliable it is, and whether management maintains a competitive advantage. USCF SummerHaven Dyn Cmdty Stgy NoK-1 Fd earns an Average Process Pillar rating. The primary contributor to the rating is its parent firm's excellent long-term risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 4.0 stars. Noteworthy risk-adjusted performance also bolsters the rating. This can be seen in the fund's five-year alpha calculated relative to the category index, which suggests that the process was successful over that period. Lastly, the process is limited by the turnover of talent across its parent firm. The firm's asset-weighted manager tenure of two years suggests it could do more to retain portfolio managers.

The investment strategy as stated in the fund's prospectus is as follows: 

 The investment seeks long-term total return.  The fund seeks to maintain substantial economic exposure to the performance of the commodities markets. It primarily gains exposure to the commodities markets through the investments of its wholly-owned subsidiary. The subsidiary, which has the same investment objective as the fund, is advised by the Adviser and sub-adviser. The fund seeks to provide exposure to the commodities markets that corresponds to the SummerHaven Dynamic Commodity Index Total ReturnSM. The index is a total return commodity sector index designed to broadly represent major commodities. The fund is non-diversified.

Average

Process

Even with strengths like an experienced longest-tenured manager, the team managing USCF SummerHaven Dyn Cmdty Stgy NoK-1 Fd has a number of weaknesses, including a lack of manager investment. This warrants a Below Average People Pillar rating. Andrew F. Ngim, the longest-tenured manager on the strategy, boasts 24 years of portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 4.0 stars, indicating that their risk-adjusted returns exceeded the category average. Andrew F. Ngim has an experienced listed co-manager. Together, they average 12 years of portfolio management experience.  None of the portfolio managers here invest in this fund. This hurts the rating because manager investment would align their interests with the strategy's investors.

Below Average

People

USCF fails to meet industry-standard stewardship qualities, culminating in a Below Average Parent Pillar rating. Aside from the overall view, the firm's portfolio managers have worked to align their interests with investors' by taking a personal stake and investing alongside them. Almost 33% of the firm’s assets are covered by invested managers. A cause for concern at USCF is its relatively inexperienced longest-tenured management. In particular, average asset-weighted tenure at the firm is only two years, a negative contributor to the rating. The USCF three-year risk-adjusted success ratio stands out versus its peers. In particular, 100% of its products have survived and beaten their respective category median on a risk-adjusted basis over the past three years.

Parent

USCF SummerHaven Dynamic Commodity Strategy No K-1 Fund

SDCI is a broad-market commodity fund that holds an equally weighted portfolio of 14 commodity futures contracts. Contracts are chosen for optimal backwardation and price momentum.

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WALNUT CREEK, Calif., Nov. 3, 2021 /PRNewswire/ -- USCF today announced it has launched the USCF Gold Strategy Plus Income Fund (GLDX) with SummerHaven Investment Management, LLC (SummerHaven), a Stamford based investment management firm, as sub-adviser.

News for USCF SummerHaven Dynamic Commodity Strategy No K-1 Fund ETF (SDCI)