SRH U.S. Quality ETF retains its Morningstar Medalist Rating of Silver. The portfolio maintains a cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy's sensible investment philosophy merits an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in liquidity exposure and quality exposure compared with category peers. Low liquidity risk exposure is attributed to stocks with a low trading volume, limiting managers' flexibility. And a low quality exposure is rooted in stocks with higher financial leverage and lower profitability. 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 high portfolio management retention. As a result, the firm gets an Average Parent Pillar rating.

Analyst Rating

Iridium Communications

United Therapeutics

CACI

Leidos Hld

Owens Corning

Insight Enterprises

GoDaddy

EMCOR Group

Conagra Brands

Twenty-First Century Fox

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. SRH U.S. Quality ETF earns an Above Average Process Pillar rating. 

The most significant 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 contributes to the process. Lastly, the process is limited by the size of its portfolio management team, only two portfolio managers.

 This strategy targets deeper value plays than its peers’ average in the Mid-Cap Blend Morningstar Category. But in terms of size exposure, it does not have much of a bias and resembles the typical portfolio. Analyzing additional factors, this strategy continually held some stocks with low trading volume over the last few years. Less-liquid stocks might offer strong returns to compensate for their risks, but they can be harder and more expensive to trade in bear markets. In the latest month, the strategy was also less exposed to the Liquidity factor compared with Morningstar Category peers. This strategy has also tilted toward low-quality stocks, companies with higher financial leverage and lower profitability over peers in recent years. 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's holdings have included more companies with high dividend or buyback yields than peers over these years. High-yield stocks tend to be associated with more mature, profitable businesses that can grow as well as provide a stream of income. Such stocks could suffer, however, if setbacks force them to cut their dividends. In this month, the strategy also had more exposure to the Yield 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 industrials relative to the category average by 11.3 and 2.9 percentage points, respectively. The sectors with low exposure compared to category peers are financial services and energy, underweight the average by 7.0 and 4.7 percentage points of assets, respectively. The portfolio is composed of 61 holdings and is relatively concentrated. In particular, 25.9% of the fund’s assets are housed within the top 10 holdings, as opposed to the typical peer's 15.4%. And in closing, in terms of portfolio turnover, on a year-over-year basis, 0% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Above Average

Process

SRH Funds’s team receives a Below Average People Pillar rating. The team is bolstered by the strategy's costs, which rank in its category's least expensive quintile. A higher expense ratio reduces net returns, so low costs give this team an advantage. However, the rating is limited by the turnover of talent across its parent firm. The firm's asset-weighted manager tenure of one year suggests it could do more to retain portfolio managers. The combined average three-year excess return of each manager also holds the rating back. It suggests that the funds they manage have trailed their respective category's average return.

Below Average

People

Since its inception one year ago, SRH Funds has demonstrated that it will hold its own as a steward of capital, warranting an Average Parent Pillar rating. SRH Funds currently runs two vehicles, with a total of $192.7 million under management and a bench of four fund managers.   

 The below-average fees of SRH Funds's open-end and exchange-traded funds display a commitment to maximizing investor returns. The average net expense ratio for its funds ranks within the lowest quintile of peer asset managers.  

 To keep an Average rating, SRH Funds needs to uphold a consistent track record of positive investor experience.

Average

Parent

SRH U.S. Quality ETF

SRHQ tracks an equally weighted index of US large-cap stocks screened based on three fundamental factors: value, growth, and quality.

Paralel Advisors LLC today announced the launch of its first ETF, the SRH U.S. Quality ETF (NYSE Arca: SRHQ). SRHQ seeks to track the performance, before fees and expenses, of the SRH U.S. Quality Index, which is designed to capture the performance of U.S.

News for SRH U.S. Quality ETF ETF (SRHQ)