Weakness in ProShares S&P 500® ex-Technology's Process and People Pillar ratings limits this strategy to a Morningstar Medalist Rating of Neutral. The portfolio maintains a sizable cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy earns a Low Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in quality exposure and an overweight in liquidity exposure compared with category peers. Low quality exposure is attributed to stocks with higher financial leverage and lower profitability. And a high liquidity exposure is rooted in stocks with higher trading volumes, lending managers more flexibility. The team managing this passive strategy earns a Below Average People Pillar rating. The strategy's parent firm has some investor-friendly attributes, like overall attractive fees and a high success ratio across its product shelf. As a result, the firm gets an Average Parent Pillar rating.

Analyst Rating

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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. ProShares S&P 500® ex-Technology earns a Low Process Pillar rating. The main driver of the rating is the fund's unremarkable long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the process has struggled over that period. The parent firm's five-year retention rate of 58% also limits the process. The parent firm's five-year risk-adjusted success ratio of 38% further detracts from the process. 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. The parent's modest success ratio suggests that the firm could do better across its fund lineup.

The investment strategy as stated in the fund's prospectus is:  The investment seeks investment results, before fees and expenses, that track the performance of the S&P 500® Ex-Information Technology Index (the "index").  Under normal circumstances, and the fund will invest at least 80% of its total assets in component securities. The index and fund seek to provide exposure to the companies of the S&P 500® Index (the "S&P 500") with the exception of those companies included in the Information Technology Sector. 

 The portfolio is overweight in consumer cyclical and healthcare relative to the category average by 5.2 and 4.6 percentage points, respectively. The sectors with low exposure compared to category peers are technology and basic materials, with technology underweighting the average portfolio by 26.5 percentage points of assets and basic materials similar to the average. The portfolio is composed of 440 holdings and is less top-heavy than peers. Specifically, 25.2% of the portfolio's assets are concentrated within the top 10 fund holdings, as opposed to the category average's 48.8%. And finally, in terms of portfolio turnover, on a year-over-year basis, 6% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Process

ProShares’s team receives a Below Average People Pillar rating. The team benefits from the fund's structure. It tracks an index, which is helpful because historical data, like Morningstar's Active/Passive Barometer, finds that index funds have generally outperformed their active counterparts, especially over the long term. However, the rating is limited by the parent firm's five-year success ratio of 32%. 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 parent firm's five-year retention rate of 58% also limits the team.

Below Average

People

In a competitive industry, ProShares doesn't differentiate itself enough, leading to an Average Parent Pillar rating. One notable advantage of ProShares is its below-average fees. On average, the firm's open-end and exchange-traded fund fees fall in the second-cheapest quintile of category peers. The firm’s lineup has demonstrated industry-average durability. Its 10-year success ratio is 57%, meaning that 57% of strategies have both survived and beaten their respective category median. A firm's success ratio indicates relative performance and provides insight into a firm’s discipline around investment strategy and product development. ProShares has faced above-average manager turnover in the past five years. This is a concern, as long-term stability tends to support positive results.

Average

Parent

ProShares S&P 500 Ex-Technology ETF

SPXT tracks a market-cap-weighted index of US large-cap stocks, excluding firms in the technology sector.

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