Weakness in ETC 6 Meridian Quality Growth ETF's People and Process Pillar ratings limits this strategy to a Morningstar Medalist Rating of Negative. Fees are a weakness here. The strategy's lofty fees are a high hurdle to clear, as it is priced within the second-costliest quintile among peers.  

 The strategy's inexperienced portfolio management team drives the strategy's Low People Pillar. The strategy earns a Low Process Pillar rating.  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 strategy's parent organization still has a way to go to reach the industry standard, evidenced by minimal personal investments from portfolio managers and portfolio managers with limited tenures at the firm. As a result, the firm obtains a Below Average Parent Pillar rating.

Analyst Rating

Alphabet

Apple

Visa

NVIDIA

Mastercard

Costco

Home Depot

Applied Materials

Intuit

Intuitive Surgical

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. ETC 6 Meridian Quality Growth ETF earns a Low Process Pillar rating. 

The primary detractor from the rating is the parent firm's five-year risk-adjusted success ratio of 0%. 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 subpar success ratio suggests that the firm could do better across its fund lineup. The parent firm's five-year retention rate of 64% also limits the process. Management team experience, which averages three years at this fund, detracts from the rating as well.

 This strategy tends to hold smaller, more value-oriented companies than its average peer in the Large Growth Morningstar Category. Analyzing additional factors, this strategy has consistently had a defensive tilt owing to its exposure to high-quality stocks over the past few years. Though it may trail peers during an economic boom, this orientation contributes to helping it weather periods of economic stress better. In recent months, the strategy was more exposed to the Quality factor compared with its Morningstar Category peers as well. This strategy's portfolio also has had exposure to more stocks with high dividend or buyback yields over peers in 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. Compared with category peers, however, the strategy had less Yield factor exposure in the latest month. In addition, this strategy has an underweight bias to the volatility factor, meaning investing in stocks that have a lower standard deviation of returns. These low-risk stocks are typically at their best when markets are not. Low volatility exposure contributes to limited loss on the downside at the cost of a lag in bull markets. In this month, however, the strategy had more exposure to the Volatility factor than 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 defensive and healthcare relative to the category average by 4.1 and 3.5 percentage points, respectively. The sectors with low exposure compared to category peers are consumer cyclical and communication services, underweight the average by 6.1 and 4.3 percentage points of assets, respectively. The strategy owns 89 securities and its assets are more dispersed than peers in the category. In particular, 43.6% of the fund’s assets are concentrated in the top 10 fund holdings, as opposed to the typical peer's 53.2%. And in closing, in terms of portfolio turnover, looking at year-over-year movements, 59% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Process

ETC 6 Meridian Quality Growth ETF earns a Low People Pillar rating. The most significant detractor from the rating is the experience of the management team, which averages three years at this fund. The instability of talent across its parent firm also detracts from the team. The firm's asset-weighted manager tenure of four years suggests it could do more to retain portfolio managers. The parent firm's subpar risk-adjusted performance, as shown by its average overall Morningstar Rating of 2.7 stars, detracts from the rating as well. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis.


None of the managers here invest any money in the strategy, which is disappointing, as such investments help align managers' interests with fundholders.

People

Exchange Traded Concepts lags peer asset managers in a number of stewardship qualities, resulting in a Below Average Parent Pillar rating. Portfolio managers at Exchange Traded Concepts tend not to invest alongside their shareholders, detracting from the overall stewardship assessment. None of the firm’s assets are covered by an invested manager. A cause for concern at Exchange Traded Concepts is its relatively inexperienced longest-tenured management. In particular, average asset-weighted tenure at the firm is only four years, a negative contributor to the rating. The firm charges fees on its open-end and exchange-traded funds that are on par with category peers. On average, fund fees on its products fall in the middle quintile, giving it neither an advantage nor disadvantage compared with the competition.

Below Average

Parent

6 Meridian Quality Growth ETF

SXQG is an actively-managed fund of US-based companies that exhibit high quality and growth characteristics relative to their peers.

Vrts Cmb Mn Bnd Shs of Benef Interest

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On Tuesday, 6 Meridian, a registered investment advisor, announced the expansion of their product lineup with the launch of its newest equity ETF, the 6 Meridian Quality Growth ETF (SXQG), an actively managed strategy that helps investors capture exposure to companies exhibiting strong growth characteristics. SXQG takes a carefully screened, quant-driven approach, resulting in a [.

6 Meridian Expands ETF Lineup with Growth Strategy Fund, ‘SXQG'

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News for 6 Meridian Quality Growth ETF ETF (SXQG)