The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  Spear Alpha ETF 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 team managing 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 considerable 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 firm has some investor-friendly attributes, like low portfolio manager turnover, but it is held back by a relatively inexperienced portfolio management team. As a result, the firm gets an Average Parent Pillar rating.

Analyst Rating

NVIDIA

Zscaler

Advanced Micro Devices

Snowflake

SentinelOne

CrowdStrike

Marvell Technology

Confluent

Freeport-McMoRan

Constellation Energy Corp

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. Spear Alpha ETF earns an Average Process Pillar rating. 

The leading factor in the rating is the firm's five-year retention rate of 100% over the period. A low expense ratio also contributes to the process, with fees ranking in its category's second-cheapest fifth. Higher fees reduce net returns, which gives this fund an advantage over those with higher costs. Lastly, the process is limited by the experience of the management team, which averages three years at this fund.

 This strategy leans toward smaller, more growth-oriented companies than its average peer in the Technology Morningstar Category. Analyzing additional factors, this strategy has consistently tilted toward companies with relatively higher trading volumes in the last 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 favored low-quality stocks. This means the fund avoids holding companies that are consistently profitable, growing, and have solid balance sheets. Such positions do not tend to provide much ballast for a portfolio. Similarly, in recent months, the strategy also had less exposure to the Quality factor than peers. In addition, this strategy has exhibited a tilt toward higher-volatility stocks in these years, meaning companies that have a higher historical standard deviation of returns compared with peers. This is a higher-risk, higher-reward approach. 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 basic materials relative to the category average by 7.5 and 5.4 percentage points, respectively. The sectors with low exposure compared to category peers are communication services and financial services, with communication services underweighting the average portfolio by 9.4 percentage points of assets and financial services similar to the average. The strategy owns 29 securities and is relatively concentrated. In particular, 74.0% of the fund’s assets are housed within the top 10 holdings, compared with the typical peer's 52.3%. And in closing, in terms of portfolio turnover, looking at year-over-year movements, 209% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Average

Process

Spear Alpha ETF earns a Below Average People Pillar rating. The team is supported by the firm's five-year retention rate of 100%. However, the rating is weakened by the experience of the management team, which averages three years at this fund. The rating is also limited because none of the managers have over $1 million invested in the fund, which would align their interests with fundholders.

Below Average

People

Since its inception only two years ago, Spear has demonstrated that it can be trusted as much as the next asset manager. As a result, it has an Average Parent Pillar rating. Spear currently runs one vehicle, with a total of $76.7 million under management and one portfolio manager. As a consequence of being a new firm, its solo manager brings limited experience, with only three years under their belt.  

   

 To maintain an Average rating, Spear will be expected to uphold a consistent track record of positive investor experience.

Parent

Spear Alpha ETF

SPRX actively invests in global thematic companies it believes will benefit from breakthrough innovations in the industrial and technology space.

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News for Spear Alpha ETF ETF (SPRX)