The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  SEI Enhanced US Large Cap Value 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 merits an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in liquidity exposure and has a considerable underweight in quality exposure compared with category peers. 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 is industry standard, albeit with some strong attributes like overall affordable fees and a cohort of experienced portfolio managers. This earns the firm an Average Parent Pillar rating.

Analyst Rating

Microsoft

Apple

PulteGroup

McKesson

QUALCOMM

Vistra Energy

Alphabet

Cardinal Health

Kroger

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. SEI Large Cap Value Factor ETF earns an Average Process Pillar rating. 

The primary contributor to 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 outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. Low costs across its parent firm's funds, whose fees, on average, rank in the second-cheapest quintile of their respective category, also influence the rating. 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 hold onto its portfolio managers.

 This strategy tends to hold smaller, deeper value companies compared with its average peer in the Large Value Morningstar Category. Looking at additional factor exposure, this fund has constantly tilted toward stocks with higher trading volumes than its Morningstar Category Peers over the past few years. This gives the managers more flexibility during bear markets to sell without adversely affecting prices. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. The strategy has also had a defensive tilt, demonstrated by lower exposure to the quality factor than peers in recent years. This means the fund has avoided holding companies that are consistently profitable, growing, and have solid balance sheets. Lacking this ballast, the fund's prospects could rest on its ability to beat peers during economic booms. Similarly, in recent months, the strategy also had less exposure to the Quality factor than peers. Additionally, the managers have consistently taken on more risk, demonstrated by higher volatility exposure than peers. Such stocks tend to rise faster and fall harder than the broad market. High-volatility exposure contributes to stronger performance during bull markets, but often at the cost of losing more during downturns. In this month, the strategy also had more exposure to the Volatility factor 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 technology and communication services relative to the category average by 13.9 and 7.6 percentage points, respectively. The sectors with low exposure compared to category peers are industrials and energy, underweight the average by 8.3 and 5.7 percentage points of assets, respectively. The portfolio has 103 holdings and invests 29.0% of assets in its top 10 holdings, similar to the category average.

Average

Process

SEI Large Cap Value 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 quintile. Fees detract from net returns, so the managers have a lower expense hurdle to overcome. However, the rating is weakened 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 holds the team back. The measure indicates the percentage of a firm's funds that survived and outperformed 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.


The team is backed by Eugene Barbaneagra, the longest-tenured manager on the strategy, who provides 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. The team is small but adequately equipped, with only one other supporting manager. Together, the two listed managers have 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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