Zacks Small/Mid Cap ETF's Average People Pillar and Process Pillar ratings result in a Morningstar Medalist Rating of Neutral. The portfolio maintains a cost advantage over competitors, priced within the second-cheapest fee quintile among peers.  

 The strategy's portfolio management team does not stand out and still needs to prove it has a competitive advantage. This earns the strategy an Average People Pillar rating. The strategy earns an Average Process Pillar rating.  High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And momentum exposure is rooted in holding stocks currently on a winning streak. To be considered a quality steward, this strategy's parent organization needs to improve factors like portfolio managers with modest tenures and a below-average success ratio across its lineup. The firm currently obtains a Below Average Parent Pillar rating, the result of a recent pillar downgrade from Average.

Analyst Rating

EMCOR Group

Builders FirstSource

Sylvamo Corp

Constellation Energy Corp

ESAB Corp

Murphy USA

BellRing Brands Inc

Applied Industrial Technologies

Cadence Design Systems

Madison Square Garden Entertainment

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. Zacks Small/Mid Cap ETF earns an Average Process Pillar rating. 

The leading factor in the rating is the experience of the management team, which averages 30 years at this fund. A low expense ratio, with costs ranking in its category's cheapest fifth, also contributes to the process. Higher fees reduce net returns, which gives this fund an advantage over those with higher costs. Lastly, the process is limited by the parent firm's five-year retention rate of 75%, 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 Mid-Cap Blend 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. More-liquid assets are easier to buy and sell without adversely moving their prices and tend to provide some ballast during market selloffs. They also are easier to sell to meet redemptions if a host of investors decide to leave the fund in a short period of time. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. This strategy has also demonstrated more exposure to high-momentum stocks over peers in recent years. Momentum is based on the premise that stocks that have recently outperformed will continue to outperform, and those that have underperformed will stay behind. Compared with category peers, the strategy also had more exposure to the Momentum factor in the most recent month. 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 consumer cyclical by 3.0 percentage points in terms of assets compared with the category average, and its basic materials allocation is similar to the category. The sectors with low exposure compared to category peers are technology and real estate, with technology underweighting the average portfolio by 3.0 percentage points of assets and real estate similar to the average. The strategy owns 199 securities and its assets are more dispersed than the typical peer in the category. In the most recent disclosure, 11.9% of the strategy's assets were concentrated in the top 10 fund holdings, compared to the category’s 15.4% average. And in closing, in terms of portfolio turnover, on a year-over-year basis, 3% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Average

Process

Zacks Small/Mid Cap ETF earns an Average People Pillar rating. Management team experience, which averages 30 years at this fund, contributes to the rating. The rating is limited by the parent firm's five-year success ratio of 0%. 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.

People

Zacks has a ways to go to become an industry-standard steward, resulting in a Below Average Parent Pillar rating. With an average asset-weighted tenure of eight years among the longest-tenured managers at Zacks, the firm is on par with peers. Seasoned teams tend to have more experience to draw upon should they need to weather turbulent market conditions. Zacks fails to showcase longevity across its product shelf, as evidenced by its five-year success ratio. Over this time period, only 0% of its roster has been able to both survive and beat its respective category median. A low success ratio indicates poor performance and raises questions about a firm’s discipline around investment strategy and product development. Zacks has had high portfolio management turnover over the past five years compared with peers, detracting from its rating, as long-term stability tends to go together with positive results.

Below Average

Parent

Zacks Small/Mid Cap ETF

SMIZ aims to generate positive risk-adjusted returns by investing in small- and mid-cap US stocks. The actively managed fund selects companies based on analyst agreement, magnitude, upside, and surprise.

Zacks Investment Management has launched its second actively managed ETF. The Zacks Small and Mid Cap ETF (NYSE Arca: SMIZ) seeks to generate positive risk-adjusted returns by investing in small and mid-cap companies.

Zacks Actively Seeks Small and Mid Cap Stocks With SMIZ ETF

CHICAGO--(BUSINESS WIRE)--Zacks Investment Management, a wholly-owned subsidiary of Zacks Investment Research with $15.1 billion in assets under management, on Oct. 3, 2023, announces the launch of its second actively-managed ETF — the Zacks Small and Mid Cap ETF (NYSE Arca: SMIZ). SMIZ seeks to generate positive risk-adjusted returns by investing in small and mid-cap companies. “The current market climate presents both challenges and opportunities for investors. SMIZ is our response to an incr.

News for Zacks Small/Mid Cap ETF ETF (SMIZ)