The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  SEI Enhanced Low Volatil US Lg Cap ETF to a Morningstar Medalist Rating of Neutral.  The portfolio maintains a sizable 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 gets an Average Process Pillar rating.  Low quality exposure is attributed to stocks with higher financial leverage and lower profitability. And low volatility exposure is rooted in stocks that have a lower standard deviation of returns. 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 low fees and an experienced bench of portfolio managers.

Analyst Rating

Microsoft

Apple

Merck

Oracle

Procter & Gamble

Walmart

Johnson & Johnson

Republic Services

McKesson

Verizon

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 Low Volatility Factor ETF earns an Average Process Pillar rating. 

The main driver of 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 bolster the process. The pattern of low expenses 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 leans toward smaller, deeper value companies compared with its average peer in the Large Blend Morningstar Category. Analyzing additional factors, this strategy has consistently favored low-quality stocks compared with Morningstar Category peers over the past few years. Lacking this ballast, the fund's prospects could rest on its ability to beat peers during economic booms. In the latest month, the strategy was also less exposed to the Quality factor compared with Morningstar Category peers. The managers have also shown an underweight risk tilt, demonstrated by lower volatility exposure over peers in recent 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. Similarly, in recent months, the strategy also had less exposure to the Volatility factor than peers. Additionally, the managers have tended to overweight yield, shown by the portfolio's high exposure to stocks paying dividends or buying back shares. High-yield stocks tend to be associated with more mature, profitable businesses that can grow as well as provide a stream of income. Such stocks could suffer, however, if setbacks force them to cut their dividends. In this month, the strategy also had more exposure to the Yield 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 consumer defensive and healthcare relative to the category average by 5.5 and 4.6 percentage points, respectively. The sectors with low exposure compared to category peers are consumer cyclical and financial services, underweight the average by 6.1 and 4.3 percentage points of assets, respectively. The portfolio is composed of 82 holdings and is diversified among those holdings. In its most recent portfolio, 32.2% of the strategy's assets were concentrated in the top 10 fund holdings, as opposed to the category’s 49.5% average.

Average

Process

SEI Large Cap Low Volatility Factor ETF earns a Below Average People Pillar rating. The team is strengthened by the strategy's costs, which rank in its category's cheapest quintile. A higher expense ratio reduces net returns, so low costs give this team an advantage. However, the rating is weakened by the parent firm's five-year retention rate of 64%, which suggests it could do more to hold onto 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 outperformed their respective category's median return for the period. The parent's subpar 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, reflecting below-average risk-adjusted performance versus category peers. 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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