Syntax Stratified Total Market II ETF's Average People Pillar and Process Pillar ratings result in a Morningstar Medalist Rating of Neutral. The portfolio maintains a sizable cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy has experienced a bout of turnover recently, leading to concerns over continuity on the strategy. However, other strengths earn the strategy an Average People Pillar rating. The strategy merits an Average Process Pillar rating.  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 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

Syntax ETF Trust - Syntax Stratified LargeCap ETF

Syntax Stratified SmallCap ETF

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. Syntax Stratified Total Market II ETF earns an Average Process Pillar rating. 

The most significant contributor to the rating is the parent firm's five-year risk-adjusted success ratio of 100%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. The firm's five-year retention rate of 75% also strengthens the process. Lastly, the process is limited by the experience of the management team, which averages three years at this fund.

 This strategy leans toward smaller, deeper value companies compared with its average peer in the Large Blend Morningstar Category. Examining additional factor exposure, the fund has held stocks with higher trading volumes compared to Morningstar Category Peers in the past few years. More-liquid assets contribute to more-flexible exit strategies without price changes and tend to be a ballast during market selloffs. For example, if the portfolio faces successive redemptions in a short period of time, it will be less likely to suffer from a significant loss. 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. Additionally, the managers have consistently taken on more risk, demonstrated by higher volatility exposure than peers. This contributes to 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 consumer defensive and consumer cyclical relative to the category average by 5.7 and 3.9 percentage points, respectively. The sectors with low exposure compared to category peers are technology and financial services, underweight the average by 11.4 and 2.9 percentage points of assets, respectively. The strategy has only reported a handful of holdings, and is in a category where 48.8% of assets are typically concentrated in the top 10 holdings. And finally, in terms of portfolio turnover, on a year-over-year basis, 1% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Average

Process

Syntax Stratified Total Market II ETF earns an Average People Pillar rating. The most significant contributor to the rating is its parent firm's five-year success ratio of 100%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median return for the period. A low expense ratio also bolsters the rating, with costs ranking in its category's second-cheapest quintile. 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.


The strategy is backed by James Thomas Wolfe, the longest-tenured manager, who has been a listed portfolio manager for six years. The average Morningstar Rating of the strategies they currently manage is 3.3 stars, indicating that their risk-adjusted returns outperformed the category average. The team is small and inadequately equipped, with only one other listed manager supporting it. Together, the two average three years of listed portfolio management experience. The team has seen more turnover than its peers, which could hinder its effectiveness. The most recent documented departure was last month. None of the managers here invest any money in the strategy, which is disappointing, as such investments help align managers' interests with fundholders.

People

Syntax's track record as a steward is mixed, leading to an Average Parent Pillar rating. The firm's lasting product shelf is its strength. Its five-year success ratio of 100% means that 100% of its strategies have both survived and beaten their respective category median. A high success ratio indicates good performance and provides insight into a firm’s discipline around investment strategy and product development. A strength of Syntax is its very competitive risk-adjusted performance. The firm's open-end and exchange-traded funds average a five-year Morningstar Rating of 4.0 stars. Syntax's longest-tenured managers do not possess comparable experience as teams at other firms, a cause for concern. Specifically, average tenure within the firm is four years. As such, there is less confidence in the group's ability to manage capital through a full market cycle effectively.

Parent

Syntax Stratified Total Market II ETF

SYII is an actively managed fund-of-funds composed of three to four stratified-weight ETFs that provide exposure to large-, mid-, and small-cap US equities.

Syntax Stratified US Total Market ETF

The fund covers the same market as an existing Syntax ETF, but invests mainly in individual stocks rather than other ETFs.

New Syntax ETF Has More Granular Approach

Syntax Advisors LLC has launched the Syntax Stratified Total Market II ETF (NYSE Arca: SYII), which is available to trade on the New York Stock Exchange Arca. SYII seeks to obtain capital growth that exceeds the performance of the S&P Composite 1500® Index over a full market cycle by investing in ETFs or underlying securities that [.

News for Syntax Stratified Total Market II ETF ETF (SYII)