A drop in its Process Pillar rating is the primary driver of Putnam BioRevolution ETF's downgrade to a Morningstar Medalist Rating of Neutral from Bronze. The portfolio maintains a sizable cost advantage over competitors, priced within the second-lowest fee quintile among peers.  

 The strategy earns a Below Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an overweight in quality exposure and yield exposure compared with category peers. High quality exposure is attributed to stocks with low financial leverage and strong returns on equity. And a high yield exposure is rooted in holding high dividend-paying or buyback stocks. Confidence in the strategy's portfolio management drives an Above Average People Pillar rating. The strategy's parent organization earns the firm an Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

Analyst Rating

Thermo Fisher Scientific

Danaher

NVIDIA

Alphabet

Bio-Rad Laboratories

Corteva Inc

AbbVie

Eli Lilly

Regeneron Pharmaceuticals

DuPont de Nemours

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. Putnam BioRevolution ETF earns a Below Average Process Pillar rating. 

The process is bolstered by the continuity of management across its parent firm. The firm's asset-weighted manager tenure of 18 years demonstrates its ability to retain portfolio managers. However, the rating is limited by its parent firm's inferior risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 2.5 stars. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis. Management team experience, which averages seven years at this fund, also holds the rating back.

 This strategy has more exposure to the Growth factor than the Health Morningstar Category average. But in terms of market capitalization, it is on par with peers. Looking at additional factor exposure, this strategy has consistently favored high-quality stocks, including those with low financial leverage and solid returns on equity, compared with Morningstar Category peers during recent 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 has also displayed a tendency to hold more companies with high dividend or buyback yields than peers over recent years. Higher-yield stocks can provide steady income, but also have their risks. Dividend payers may cut payouts, for instance, if their earnings fall. Compared with category peers, the strategy also had more exposure to the Yield factor in the most recent month. Given the high trading volume of holdings, this fund also holds highly liquid assets. Such stocks may have less potential upside than illiquid holdings, but they are easier to trade during market downturns. In recent months, however, the strategy had less Liquidity factor exposure 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 basic materials and technology relative to the category average by 24.7 and 7.9 percentage points, respectively. The sectors with low exposure compared to category peers are healthcare and real estate, with healthcare underweighting the average portfolio by 46.8 percentage points of assets and real estate similar to the average. The strategy owns 36 securities and is relatively top-heavy. Of the strategy's assets, 53.5% are concentrated within the top 10 holdings, as opposed to the category’s 41.0% average. And in closing, in terms of portfolio turnover, looking at year-over-year movements, 46% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Below Average

Process

Putnam BioRevolution ETF earns an Above Average People Pillar rating. The main contributor to the rating is the combined average five-year excess return of each manager, which indicates that the funds they manage have exceeded an average manager. The rating is limited by its parent firm's inferior risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 2.5 stars. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis.

Above Average

People

Franklin Templeton Investments, the asset-management arm of publicly traded but family managed Franklin Resources BEN, has been busy with acquisitions. The struggle in streamlining these disparate capabilities underpins its Average Parent rating. 
Franklin’s July 2020 acquisition of multiboutique manager Legg Mason remains its largest as of March 2023, but the firm has continued to grow through acquisitions. Its April 2022 and November 2022 purchases of Lexington Partners and Alcentra, respectively, make it one of world’s largest managers of alternative investments (with alts comprising USD 231 billion of its USD 1.4 trillion assets under management as of December 2022), while its July 2022 acquisition of O’Shaughnessy Asset Management adds a novel direct-indexing capability to its managed account offerings. These purchases, however, do little to alleviate the operational complexity of a firm with dozens of investment teams split by asset class, region, and investment platform.   
Although there are several standout strategies at the firm, many teams have struggled with personnel turnover, succession challenges, and unappealing performance patterns. Shepherding these geographically disparate capabilities, which have varying levels of centralization of distribution and risk management, shall be quite the challenge for the firm to manage.

Average

Parent

Putnam BioRevolution ETF

SYNB actively invests in companies of all sizes around the globe that enable biological innovation.

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BOSTON--( BUSINESS WIRE )--Putnam Investments today announced that it has officially launched five new transparent, actively managed exchange-traded funds (ETFs) that begin trading today on the New York Stock Exchange.

Putnam Investments Launches Fixed Income and Non-U.S. Equity Exchange-Traded Funds

Putnam Investments announced that on Friday, September 30, it will launch two new transparent, actively managed, equity exchange traded funds: the Putnam BDC Income ETF (NYSE Arca: PBDC), concentrating on business development companies (BDCs), and the Putnam BioRevolution ETF (NYSE Arca: SYNB), centered on companies operating at the intersection of technology and biology in the “biology revolution.

Putnam Launches 2 Active ETFs Targeting BDCs and Biotechnology

BOSTON--(BUSINESS WIRE)--On Friday, September 30, Putnam Investments will begin to offer two new transparent, actively managed, equity exchange-traded funds (ETFs). The firm will be launching Putnam BDC Income ETF, concentrating in business development companies (BDCs), and Putnam BioRevolutionTM ETF, centered on companies operating at the intersection of technology and biology in the “biology revolution.” One important milestone of the upcoming launch is that the Putnam BDC Income ETF will rep

News for Putnam BioRevolution ETF ETF (SYNB)