Syntax Stratified US Total Market ETF's Average People Pillar and Process Pillar ratings result in a Morningstar Medalist Rating of Neutral. The portfolio maintains a 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 gets an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in volatility exposure and has a considerable overweight in yield exposure compared with category peers. Low volatility exposure is attributed to stocks with a lower standard deviation of returns. And a high yield exposure is rooted in holding high dividend-paying or buyback stocks. The strategy's parent organization is industry standard, albeit with some strong attributes like a competitive lineup success ratio and a competitive average Morningstar Rating. 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 US Total Market ETF earns an Average Process Pillar rating. 

The predominant 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 parent firm's excellent risk-adjusted performance, as shown by its average overall Morningstar Rating of 3.3 stars, also strengthens the process. Lastly, the process is limited by the experience of the management team, which averages four years at this fund.

 This strategy skews toward larger, deeper value companies compared with its average peer in the Mid-Cap Blend Morningstar Category. Examining additional factor exposure, this strategy has consistently exhibited a tilt toward low-volatility stocks or companies whose shares have a history of lower standard deviation of returns, compared with its Morningstar Category peers in recent years. 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 the latest month, the strategy was also less exposed to the Volatility factor compared with Morningstar Category peers. The managers have also tended to overweight yield during recent years, shown by the portfolio's high exposure to dividends or buybacks. Higher-yield stocks can provide dependable 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 low trading volume of holdings, this strategy has also tilted toward illiquid assets during these 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 recent months, the strategy also had less Liquidity factor exposure 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 communication services relative to the category average by 8.1 and 3.7 percentage points, respectively. The sectors with low exposure compared to category peers are industrials and financial services, underweight the average by 8.9 and 3.9 percentage points of assets, respectively. The strategy has only reported a handful of holdings, and is in a category where the typical fund has 15.4% of assets within the top 10 holdings. And finally, in terms of portfolio turnover, looking at year-over-year movements, 1% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Average

Process

Syntax Stratified US Total Market ETF earns an Average People Pillar rating. The primary 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 outperformed their respective category's median return for the period. A low cost, with fees that rank in its category's least costly quintile, also bolsters the rating. Fees detract from net returns, so the managers have a lower expense hurdle to overcome. Lastly, the rating is limited by the instability of talent across its parent firm. The firm's asset-weighted manager tenure of four years suggests it could do more to retain portfolio managers.


James Thomas Wolfe brings six years of listed portfolio management experience to the team. The average Morningstar Rating of the strategies they currently manage is 3.3 stars, demonstrating average risk-adjusted performance. The team is small and inadequately equipped, with only one other listed manager supporting it. Together, the two average four years of listed portfolio management experience. The team has been a revolving door, with higher-than-average portfolio-manager turnover. The most recent documented departure was one month ago. High team turnover can hinder the effectiveness of a strategy's investment process. None of the portfolio managers here invest in this fund. This hurts the rating because manager investment would align their interests with the strategy's investors.

People

Syntax has some investor-friendly attributes, but other attributes warrant caution, leading to an Average Parent Pillar rating. Even with an average pillar rating, Syntax has had impressive longevity among its product shelf. The firm's success ratio is 100%, meaning 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. Syntax has served investors well through its very competitive risk-adjusted performance, with an average five-year Morningstar Rating of 4.0 stars across its open-end and exchange-traded funds. 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 US Total Market ETF

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

Syntax Stratified Total Market II 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

On Friday, Syntax Advisors, LLC announced the launch of the Syntax Stratified U.S. Total Market ETF (SYUS), available for trading on NYSE Arca. SYUS launched with $21M in AUM, and it marks the fourth and latest ETF in Syntax's expanded family of Stratified Weight funds.

News for Syntax Stratified US Total Market ETF ETF (SYUS)