SP Funds S&P 500 Sharia Industry Ex ETF’s management team is rated Average, but a solid investment process still helps this strategy retain its Morningstar Medalist Rating of Bronze. The portfolio maintains a cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy's effective investment philosophy supports an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in quality exposure and yield exposure compared with category peers. A high quality exposure means holding stocks that are consistently profitable, growing, and have solid balance sheets. And a high yield exposure is rooted in holding high dividend-paying or buyback stocks. The team managing the passive strategy earns the strategy an Average People Pillar rating, following a recent upgrade from Below Average. The strategy's parent organization is industry standard, albeit with some strong attributes like a favorable lineup success ratio and a successful risk-adjusted track record. This earns the firm an Average Parent Pillar rating.

Analyst Rating

Microsoft

Apple

NVIDIA

Alphabet

Eli Lilly

Broadcom

Tesla

Exxon Mobil

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. SP Funds S&P 500 Sharia Industry Ex ETF earns an Above Average Process Pillar rating. The primary contributor to the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. The firm's five-year retention rate of 100% also supports the process. Lastly, the process is limited by the number of months that the management team has been running this vehicle together.

The investment strategy as stated in the fund's prospectus is:  The investment seeks to track the performance, before fees and expenses, of the S&P 500 Shariah Industry Exclusions Index.  The index is composed of the constituents of the S&P 500® Shariah Index other than those from the following sub-industries: Aerospace & Defense, Financial Exchanges & Data, and Data Processing & Outsourced Services. The manager attempts to invest all, or substantially all, of its assets in the component securities that make up the index. Under normal circumstances, and at least 80% of the fund's total assets will be invested in the component securities of the index. It is non-diversified. 

 The portfolio is overweight in technology and energy relative to the category average by 5.4 and 4.1 percentage points, respectively. The sectors with low exposure compared to category peers are financial services and consumer cyclical, underweight the average by 8.4 and 7.0 percentage points of assets, respectively. The portfolio is composed of 235 holdings and is less top-heavy than peers. Specifically, 48.2% of the fund’s assets are concentrated within the top 10 fund holdings, compared to the typical peer's 53.2%. And finally, in terms of portfolio turnover, looking at year-over-year movements, 5% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Above Average

Process

SP Funds’s team receives An Average People Pillar rating. The most important driver of the rating is the firm's five-year retention rate of 100%. A low cost, with fees that rank in its category's cheapest fifth, also bolsters the rating. Fees reduce net returns, so the team has a lower expense hurdle to overcome. Lastly, the rating is limited by the managers' failure to consistently outperform peers at the funds they run, as measured by their combined three-year manager excess returns.

Average

People

SP Funds is an industry-standard asset manager, leading to an Average Parent Pillar rating. The firm has had encouraging initial results among its product shelf. Its three-year risk-adjusted success ratio is 100%, meaning that 100% of the products have both survived and beaten their respective category median on a risk-adjusted basis. A high success ratio indicates good performance and provides insight into a firm’s discipline around investment strategy and product development. A strength of SP Funds is its very competitive risk-adjusted performance. The firm's open-end and exchange-traded funds average an overall Morningstar Rating of 4.0 stars. An average tenure of only two years among the longest-tenured managers at SP Funds is concerning. In isolation, seasoned teams tend to have more experience to draw upon should they need to weather turbulent market conditions.

Parent

SP Funds S&P 500 Sharia Industry Exclusions ETF

SPUS tracks a market-cap weighted index of S&P 500 stocks that are Sharia-compliant.

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SPUS tracks the S&P 500 Shariah Industry Exclusions Index. Fees are high at 0.45%, but it's been the top-performing ESG since its December 2019 launch. The primary reason is a screening and weighting process that favors high-valued Technology stocks. Debt is measured as a percentage of market capitalization, and securities are market-cap-weighted. This process allows semiconductor stocks like Nvidia and Broadcom, where competitors like HLAL, which measure debt as a percentage of total assets, exclude them.

SPUS: Shariah ESG ETF Powered By 46% Tech Beat The Market

News for SP Funds S&P 500 Sharia Industry Exclusions ETF ETF (SPUS)