The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  SEI Enhanced US Large Cap Qual Fac ETF to a Morningstar Medalist Rating of Neutral.  The portfolio maintains a cost advantage over competitors, priced within the least expensive fee 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 earns an 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 has a considerable overweight in yield exposure compared with category peers. Low volatility exposure is attributed to stocks with a lower standard deviation of returns. And a high yield exposure is rooted in holding high dividend-paying or buyback stocks. The strategy's parent organization doesn't stand out, earning the firm an Average Parent Pillar rating. It has displayed a handful of investor-friendly attributes including overall attractive fees and an experienced bench of portfolio managers.

Analyst Rating

Microsoft

Apple

Alphabet

Visa

Cadence Design Systems

O'Reilly Automotive

Mastercard

Booking Hlds

Johnson & Johnson

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. SEI Large Cap Quality Factor ETF earns an Average Process Pillar rating. 

The leading factor in the rating is the parent firm's five-year risk-adjusted success ratio of 61%. 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. Low expenses across its parent firm's funds, whose fees, on average, rank in the second-cheapest quintile of their respective category, also contribute to the process. The pattern of low fees at the firm suggests that it is focused on delivering strong results for investors. Lastly, the process is limited by the parent firm's five-year retention rate of 64%, which suggests it could do more to retain its portfolio managers.

 This strategy skews toward smaller, more growth-oriented companies than its average peer in the Large Blend Morningstar Category. Analyzing additional factors, this strategy has continually underweighted stocks that have a lower standard deviation of returns compared with Morningstar Category peers over the past few years. These low-risk stocks are typically at their best when markets are not. Low volatility exposure contributes to limited loss on the downside at the cost of a lag in bull markets. In the latest month, the strategy was also less exposed to the Volatility factor compared with Morningstar Category peers. This strategy's portfolio also has had exposure to more stocks with high dividend or buyback yields over peers in these years. Stocks with high yields can be more stable, mature companies, but at times extreme market pressure or fundamental deterioration may prompt them to cut their dividends, which tends to hurt stock performance. Compared with category peers, the strategy also had more exposure to the Yield factor in the most recent month. Given the high trading volume of holdings, this fund also holds highly liquid assets. Such stocks may have less potential upside than illiquid holdings, but they are easier to trade during market downturns. In recent months, however, the strategy had less Liquidity factor exposure over 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 consumer cyclical and technology relative to the category average by 5.8 and 5.0 percentage points, respectively. The sectors with low exposure compared to category peers are energy and basic materials, underweight the average by 3.9 and 2.7 percentage points of assets, respectively. The portfolio is positioned across 53 holdings and its assets are more dispersed than peers in the category. In particular, 43.2% of the fund’s assets are concentrated in the top 10 fund holdings, compared to the typical peer's 49.5%.

Average

Process

SEI Large Cap Quality Factor ETF earns a Below Average People Pillar rating. The team benefits from the strategy's costs, which rank in its category's least costly fifth. Fees detract from net returns, so the managers have a lower expense hurdle to overcome. However, the rating is held back by the parent firm's five-year retention rate of 64%, which suggests it could do more to retain its portfolio managers. The parent firm's five-year success ratio of 53% also limits the team. 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 relatively low success ratio suggests that the firm could do better across its fund lineup.


Eugene Barbaneagra, the longest-tenured manager on the strategy, boasts 15 years of listed portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 2.9 stars, indicating that their risk-adjusted returns have been in line with the category average. Eugene Barbaneagra draws on only one other listed manager. Together, they are adequately equipped with nine years of average listed portfolio management experience.

Below Average

People

In a competitive industry, SEI doesn't differentiate itself enough, leading to an Average Parent Pillar rating. A strength of SEI is that its product shelf of open-end and exchange-traded funds is, on average, offered at a minimal cost, suggesting that it considers what's best for its investor base. On average, fees for funds are in the second-cheapest quintile of respective category peers. Longest-tenured managers’ average asset-weighted tenure within the firm is 15 years, bringing a wealth of knowledge through multiple market cycles and ultimately contributing positively to the rating. Portfolio management turnover at SEI is higher than at peer firms, detracting from the overall assessment of the firm's stewardship. Turnover in the portfolio-management ranks can happen for a number of reasons, including mergers and liquidations, portfolio managers moving into other roles, or portfolio managers leaving the firm. In some cases, such change may not signal a serious or immediate problem at the firm, but can still be disruptive for investors, hinder the effectiveness of a firm’s investment processes, or suggest a weaker investment culture.

Parent

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