Weakness in Cabana Target Beta ETF's People and Process Pillar ratings limits this strategy to a Morningstar Medalist Rating of Negative. The portfolio maintains a sizable cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy's management team is about as experienced as others, but due to other weaknesses, the strategy earns a Low People Pillar. The strategy gets a Below Average Process Pillar rating.  The strategy's parent organization doesn't stand out, earning the firm an Average Parent Pillar rating. It has displayed a handful of investor-friendly attributes including overall attractive fees but is held back by an unsuccessful risk-adjusted track record.

Analyst Rating

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Morningstar's evaluation of this fund's process aims to determine how repeatable, consistent, and reliable it is, and whether management maintains a competitive advantage. Cabana Target Beta ETF earns a Below Average Process Pillar rating. The process is bolstered by the firm's five-year retention rate of 88% over the period. However, the rating is weakened by the experience of the management team, which averages six years at this fund. Being an actively managed strategy also detracts from the process. Historical data, like Morningstar's Active/Passive Barometer, shows that actively managed funds have generally underperformed their passive counterparts, especially over longer time horizons.

 Its equity sleeve has exhibited a continual bias to smaller market-cap stocks versus the average. Although in terms of style (value/growth) exposure, it is average. The strategy has three region or sector biases compared to category peers. The most notable is its consistent underexposure to the Developed Europe region. It also maintains an overweight bias toward developed markets regions. Lastly, the portfolio has maintained an underweight position in the financial services sector. 

 The portfolio is overweight in utilities and energy relative to the category average by 30.0 and 28.4 percentage points, respectively. The sectors with low exposure compared to category peers are financial services and healthcare, underweight the average by 13.4 and 9.7 percentage points of assets, respectively. The portfolio is overweight in North America by 17.0 percentage points compared with the category average, and Emerging Europe's allocation is similar to its peers. The regions with low exposure compared to their category peers are Developed Europe and Japan, underweight the average by 6.8 percentage points and 2.7 percentage points, respectively.

 In the fund’s bond sleeve, interest rate risk exposure is being managed higher than comparable managed products in this category. However, compared with peers, credit risk has been somewhat lower. Specifically, the fund’s average credit rating is AA compared with the category average’s BB but has a longer average duration of 10.6 years versus the average of 4.6 years.

Below Average

Process

Cabana Target Beta ETF earns a Low People Pillar rating. The most significant detractor from the rating is the experience of the management team, which averages six years at this fund. The combined average five-year excess return of each manager also limits the team. It shows that the funds they manage have trailed their respective category's average return. Turnover at its parent firm further holds the rating back. The firm's asset-weighted manager tenure of 67 years suggests that it could do more to retain portfolio managers.


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

Cabana's track record as a steward is mixed, leading to an Average Parent Pillar rating. A strength of Cabana is that its product shelf of open-end and exchange-traded funds is, on average, offered at a minimal cost, suggesting that it considers what's best for its investor base. On average, fees for funds are in the second-lowest quintile of respective category peers. The firm's risk-adjusted performance is poor. Across all open-end and exchange-traded products, the firm’s average three-year Morningstar Rating is 2.0 stars. The firm has not had a durable product lineup. Specifically, its three-year success ratio demonstrates that only 0% of products were both able to survive and beat their respective category median. A low success ratio indicates poor performance and raises questions about a firm’s discipline around investment strategy and product development.

Average

Parent

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FAYETTEVILLE, Ark.--( BUSINESS WIRE )--Cabana Asset Management (“Cabana”), a wholly owned subsidiary of The Cabana Group, LLC and an SEC registered investment adviser providing risk-managed investment portfolios to registered investment advisors (“RIAs”) and individual investors, today announced plans to transfer its two suites of Exchange Traded Funds (“ETFs”) from NYSE to Nasdaq on or about December 12, 2022. The last day of trading on NYSE will be December 9, 2022. Investors in the funds should not expect to see any impact on their trading experience as a result of the transfer.

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