Strength in Touchstone Strategic Income Opports ETF's Process Pillar is partially offset by an Average People Pillar rating, leading to a Morningstar Medalist Rating of Neutral. The portfolio maintains a sizable cost advantage over competitors, priced within the second-cheapest fee quintile among peers.  

 The strategy’s management team earns an Average People Pillar rating. The strategy's effective approach earns an Above Average Process Pillar rating. The strategy's parent organization earns the firm an Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Goldman Sachs

Bank of America

Raytheon Technologies

AT&T

Exxon Mobil

Lockheed Martin

Stanley Black & Decker

Texas Instruments

Philip Morris

Morningstar's evaluation of this fund's process seeks to understand management's investment philosophy, and whether it has been applied consistently over time and can add value across the market cycle. Touchstone Strategic Income Opports ETF earns an Above Average Process Pillar rating.    The main driver of the rating is the parent firm's five-year risk-adjusted success ratio of 63%. 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. The size of the portfolio management team also supports the process. With three portfolio managers, the fund is reasonably well-resourced. Lastly, the process is limited by the parent firm's five-year retention rate of 60%, which suggests it could do more to hold onto its portfolio managers.

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


The investment seeks a high level of current income with a focus on capital preservation.  The fund invests, under normal market conditions, at least 80% of its assets in income producing fixed-income securities. In building the fund’s portfolio, and it invests at least 50% of the fund's portfolio in investment-grade rated debt securities. It may also invest up to 50% of the fund's portfolio in non-investment-grade debt securities. It will generally sell a security if the price/yield no longer adequately compensates for the risk profile or if there is a change to allocation between sectors based on relative value.

 This strategy's 12-month yield is 5.2%, which mirrors its average peer. Plus, it has a 5.1% 30-day SEC yield (a standardized, point-in-time estimate of the fund’s future income return).

Above Average

Process

Touchstone Strategic Income Opports ETF earns an Average People Pillar rating. Brendan M. White’s veteran status, with over 25 years of listed portfolio management experience, brings a wealth of experience to the table.  Although the team is small, it is a solid supporting cast. Together, the three listed managers boast more than an average of 21 years of listed portfolio management experience. As a team, they manage three investment vehicles together, with an asset-weighted average Morningstar Medalist Rating of Neutral. This means, in aggregate, the team falls short and will struggle to produce positive alpha. 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.

 Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

Average

People

Touchstone Investments' recent moves and other characteristics support an Average Parent rating, up from Below Average.
Touchstone has made a few recent moves. As part of a portfolio manager retirement, it made a subadvisor and style change on one of its international funds, hiring value-oriented LSV in place of Fort Washington Investment Advisors, which remains its largest subadvisory partner. (Touchstone and Fort Washington are both subsidiaries of parent company Western & Southern Financial Group.) This change also includes a reduction in the fund's expense ratio. Touchstone is also merging another international fund into one run by Sands Capital and lowering expenses on the R6 share class of the acquiring fund. While manager changes and fund mergers can be disruptive to investors, they are also often a response to poor long-term performance or small asset bases. Lower fees, though, are always a positive.
These moves acknowledge the competitive nature of the fund industry. To grow in this environment, Touchstone has firmly staked its ground on providing funds and exchange-traded funds that are "distinctively active." The firm deserves credit for a consistent and well-codified approach to manager research. A small investment team evaluates new managers and existing ones along five areas it thinks lead to outperformance: organizational stability, personnel, investment discipline, firm infrastructure, and results. Although Touchstone often makes investment-style and portfolio-manager changes to funds it has acquired—it has made two substantive acquisitions in the past five years—overall a patient mindset has resulted in long-term relationships with many subadvisors even when short-term performance is weak.

Parent

Touchstone Strategic Income Opportunities ETF

SIO is an actively managed fund that holds income producing debt securities of any type, rating, and maturity, selected using a bottom-up security selection process.

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Touchstone Investments now has six actively managed ETFs. It seeks to bring its “distinctively active” mutual fund approach to meet advisors where they are focused.

Touchstone's Active ETF Lineup Is Focused on Income

Touchstone Investments announced the launch of its first of four new actively managed exchange traded funds. The Touchstone Strategic Income Opportunities ETF (NYSE Arca: SIO) trades on the New York Stock Exchange Arca.

Touchstone Launches First of 4 New Active ETFs

Expansion into ETFs provides the potential for a more tax-efficient, cost competitive and transparent way to access Touchstone's investment strategies CINCINNATI , July 25, 2022 /PRNewswire/ -- Touchstone Investments, known for its Distinctively Active® mutual funds, announced the launch of its first of four new actively managed exchange traded funds (ETFs) trading on the New York Stock Exchange Arca and Cboe BZA. The ETFs mark the natural expansion of Touchstone's Distinctively Active investment philosophy through an ETF structure, providing shareholders with more investment options.

News for Touchstone Strategic Income Opportunities ETF ETF (SIO)